Venture Capital: When Does It Make Sense to Take It as a New Business?

There are many different types of resources out there detailing what venture capital is and how it works for new startups. In the age of many promising startups, venture capital is a word that is thrown around frequently. However, this does not mean that you will need to seek out venture capital as soon as you have a business idea. There are several different things that you need to keep in mind before moving forward with seeking venture capital.

First of all, your business model should at least be somewhat proven. There should be clear evidence of customers’ interest in your service or your product and a data that indicates that you have a chance of becoming profitable. You should also already have a solid management team in place. Having sorted a business before can also give you a better understanding of what it takes to actually run a company and help you avoid some of the common mistakes that most people make. If you’re already a player at an established company, you probably already have connections that will help you to raise outside capital.

In the event that you are starting a new business, one of the key signs that it makes sense to reach out for a venture capital is if you already have real venture capital interest. The chances of closing around a venture capital fundraising are extremely low and the time spent courting venture capitalists can often be spent better elsewhere for a new business owner. However, if you already have a real venture capital interest in your startup company, this is a key indication that you may be successful at closing out around a funding.

Venture capital might be right for your business, but the only way to know for sure is to carefully consider your company’s unique position as well as what your business lawyer has to say about the situation. Choosing venture capital is not right for everyone or every business, but when it’s the right fit, you can ramp up business operations and achieve goals more quickly.

An individual who finds him or herself in this position may be in a unique spot to be able to move forward with venture capital sooner than they planned. It does not always make sense to raise venture capital for your business and it may be something you wish to discuss specifically with your business attorney as soon as possible. Understanding the pros and cons is strongly recommended.

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Written by Brett Trembly

Brett Trembly

In the South Florida legal community, Brett sits on the Board of the South Miami Kendall Bar Association, the Florida Bar 11th Circuit Grievance Committee, volunteers on the Florida Bar Young Lawyers Division Mentoring Program, the Dade-County Bar Associations Rainmakers Committee, and annually volunteers for Miami-Dade County’s Ethical Governance Day.