Venture capital: Risk or reward? | Africa Report

Venture capital makes starting a business easier, but it?s not the be-all and end-all. Sometimes, getting your business running on your own terms is the first step to take.

By Craig Falck for Africa Report

Venture capitalists are in the business to make money. They?re not there to turn every second business owner?s dreams into reality by funding them to start their business. Venture capitalists need to see a return on their investments, which is only fair. That?s become a whole lot harder these days. Entrepreneurs basically grow on trees and new businesses pop up like mushrooms in a pasture. Venture capitalists have had to become a little more tight-fisted when it comes to dishing out their funding. It?s a lot more difficult to secure financial backing than a few years ago.

To counteract this trend, focus on advancing your product or service and making it so appealing that you do, in fact, become the cream of the investing opportunity crop. It may take a bit longer than you?d like and you may have to knock on a few more doors, but the hard work will certainly pay off. When investors see how much time and effort has been put in your business and that you actually have a viable proposition for them, chances are you will get financing from them.

Another great idea is to actually fund yourself. While you may not have the money right away, you can save every cent that you can until you have enough to kick-start your business. By doing this and not selling equity early on, you can make sure that you?re in control and that you?re actually not giving away too much of your business equity. Selling 50 percent of a brand-new company is nowhere near as profitable as selling 50 percent of an established company that?s already doing well.

You don?t need to necessarily focus on securing venture capital to start your business. Instead, concentrate on developing something spectacular that will catch investors? attention at a later stage. This will help you to perfect your product or service while not selling off too much of the company just before it takes off.

Source: http://www.inc.com/brian-hamilton/why-you-dont-need-venture-capital.html

Source: http://www.africareport.com/business-finance/2012/03/01/venture-capital-risk-or-reward/

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