Sunday, April 25, 2010
Venture Capital and Angel Financing (the investors who put up money before Venture Capital firms get involved) are integral parts of the startup community.
However, most new businesses are incompatible with the Venture Capital industry. This is because Angel Networks and Venture Firms look to invest almost exclusively in high-risk, high-reward businesses. In doing so, they expect the large majority of their investments to fail, but for one in every ten or twenty to grow exponentially. Generally, businesses that meet the criteria for investment rely on new, as-yet-unproven technology that requires great investment (often over $1 million) and could not reasonably bring a product to market without such financing.
If you need investors and think your business is a target for Angel or Venture investment, come talk to Wayne Business Law about how to win over investors and what you can expect if they do choose to invest in your new business.
If you don’t think your business needs these investors, be thankful: this means that you don’t have to give up ownership of your business just to get the cash you need to start up or grow.
This article first printed in the Autumn 2009 Wayne Business Law Quarterly "Think of Everything, Act Accordingly."