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Bill McCready
You Have the Money, Now what?
The search for capital has ended. Your business plan, masterful
presentation skills, and negotiating abilities served you well,
and you’ve finally received the funding you need to move your
business forward. It was a long process, but now that it’s over
all your problems are solved!
Not so fast. Obtaining venture funding is really only the
beginning. Along with your funding, your level of accountability
just shot up dramatically.
If you received your capital from investors, someone else now
owns a part of your business. And they will want to be reassured
that they’re getting their money’s worth.
The degree of hands-on involvement may vary, but most funding
sources will expect to invest a combination of equity and
expertise in the form of strategic management or board level
direction.
Knowing that venture capital was instrumental in the success of
companies like, Apple Computer, Intel, Genentech, Federal
Express, Gymboree, and The Sports Authority can make your
transition from sole proprietor to a national company easier.
Key considerations:
+ The same management, financial savvy and growth projections
that made you a good investment risk, now must be perpetuated,
and reported on.
+ Management participation must increase and many times be
upgraded as the company grows.
+ Strict financial and budgetary controls must be implemented.
+ The whole success of your company now rests on the ability
of your sales and marketing team to reach your sales goals.
Venture capital professionals are essentially managers of risk.
Besides providing an important source of expertise for the
emerging companies they finance, venture capitalist know
individuals in banks and brokerage firms, attorneys,
accountants, and others needed to help your company succeed.
+ · Your business plan will become your budget.
+ · Milestones are no longer items on your wish list-they must
be met.
+ · Intra-company communications must be enhanced and
improved.
A VC firm's "Value Added"
Venture capital firms are not the only ones looking for value.
Usually the entrepreneurs expect more than money in return for a
share in their company. While it is said that an active venture
capital investor is one who phones yearly to see if the company
is still in business, this scenario is not typical. In fact,
what differentiates venture capitalists from the world of
passive investors is their long-term involvement with their
investments.
As an active board participant, a VC investor offers his/her
unique set of experiences and skills. A good VC firm arranges
for the long-term financing of a company and aids in developing
the management team, advisory board, new product ideas,
strategic relationships, and key customers and accounts.
+ Venture capital organizations are generally privately held
partnerships or corporations that invest alongside management in
young, rapidly growing or rapidly changing companies.
+ They invest large quantities of long-term risk capital,
usually seeking capital appreciation rather than cash repayment.
+ The company has a business plan that clearly defines the
next year's goals.
+ The company uses a budget and constantly updates it against
the business plan.
+ The company's sales force projects sales, and there is
consistency with the inventory and personnel loading in the
budget.
+ The company has a program to quantitatively measure customer
satisfaction.
A Venture Capital Firm expects to make significant profits from
their investment. They will not hesitate to suggest liquidation
or sale of your business if you do not meet the milestones
agreed upon! Keep them informed and involved.
Constantly looking for new opportunities to merge with or
acquire new companies to enhance shareholder value will keep you
fresh in the market place. Always looking for the next round of
funding is another. Remember that it takes a minimum of six
months to raise each round, so get started NOW!
http://www.ventureplan.com Tel. 858.457.3434 / efax
425-955-7531 capital@ventureplan.com
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