SECURING A VENTURE CAPITAL DEAL Venture capital is a form of financing that provides entrepreneurs and start-ups with the resources to realise their long-term potential.
S e c u r i n g A Ve n t u r e
Capital Deal
In most cases, this capital comes from investment banks, financial institutions, and investors who have the resources to invest. It is sometimes confused with private equity, which focuses on more established companies, while venture capital focuses on emerging start-ups.
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Thibaut De Roux
ONCE THE DUE DILIGENCE PART OF THE PROCESS ENDS AND THE INVESTOR IS CONFIDENT IN THE COMPANY’S GROWTH PROSPECTS, THEY PLEDGE THEIR INVESTMENT IN EXCHANGE FOR A STAKE IN THE BUSINESS.
Due Diligence A business seeking venture capital must work on a business plan that it can forward to a venture capital investor. If the latter finds the proposal interesting, it will perform due diligence on the company, which includes conducting thorough checks on the company’s products, management, operations, business model and finances. Conducting due diligence is vital in the venture capital process, as investors put in large amounts of money in companies with potential. Additionally, many venture capital investors tend to have experience in investments or knowledge of a particular industry.
The Investment Once the due diligence part of the process ends and the investor is confident in the company’s growth prospects, they pledge their investment in exchange for a stake in the business (equity). The finances may be provided all at once or in phases (also called ‘rounds’). The investor has the freedom to be involved in the business by continually monitoring and providing advice.
Thibaut De Roux
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