When is it appropriate for your business to consider VC or private equity? Initially, every entrepreneur needs to know if they have exhausted all other options. Often, when considering private investors, the company's share capital will be low. However, there are a variety of equity capital sources, including Friends&Family, Business Angels, VC, Corporate / Strategic Investors, Private Equity companies or The Entrepreneur 's capital.
For those seeking $500,000 in capital, look for VCs. For smaller investments, entrepreneurs should seek commercial angels or debt capital. Therefore, it is useful to understand the different types of funding stages, see below.
Pre-seed funds are the funds needed to physically build a business. Often this money is used to develop a good business plan that impresses potential investors.
The seed fund is the money needed to start building the company. Some companies may skip this funding phase when appropriate, but seed capital is usually the capital needed to get a start-up base. Usually at the seed stage, the company is not ready to start business. This money is usually used to rent office space, real estate, equipment needed to produce company products or services.
Seed funds are not often invested by VC, nor are they necessarily a large amount of money. Seed funding can range from $100,000 to $500,000. It rarely exceeds $1 million. Seed capital can also be raised from commercial angels, friends and family or entrepreneurs' own funds. Only 15% to 25% of VCs invest in seed funds.
Early funding is usually the place to look for VCs. Companies usually prepare for trading, but they need extra salary funds.
Later financing is also referred to as the expansion/growth phase of funding for companies that perform well and are seeking expansion.
Entrepreneurs raise seed money in a variety of ways to get started. These traditional methods include raising commercial capital from commercial lenders, commercial banks or angel investors who are willing to put seed money into business. Other smarter entrepreneurs raise seed money by raising debt capital, sweat assets, and funds from friends and family. VCs are usually raised through early funding, as described above, for Series A or Series B funding. In most cases, VC's investment will not be less than $1 million.
Knowing this, you will have a good start and take it seriously.
Orignal From: Venture capital - and other funding options for your business
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