by Edwin Ivanauskas | Tags: Personal Finance, Insurance

When anyone starts up a new business they are going to need a substantial amount of money to get the business going. You will need money for supplies, renting the building, products, and money to pay employees. This is where startup venture capital comes in.

Startup venture capital is a great way to get a large amount of money in order to start a business. Often times it is common to hear that a venture capitalist has given funding to a DotCom company but they also give funds to other businesses as well. To approach a venture capital firm you will first need to open a fund; a fund is a pool of money where venture capital firm can invest. The firm will get the money from wealthy people and from companies, pension funds, etc. that have the money they want to invest. The venture capital firm will then raise a fixed amount of money.

The venture capital firm will then invest the fixed amount of money into a number of company's usually around ten to twenty companies. Each firm and fund will have an investment profile, for example, a fund might invest in computer software or a number of mixed companies. The profile that they fund chooses has a certain amount of risks and rewards associated with it that the investors will be made aware of before they invest their money.

The venture capital firm will invest the entire fund and anticipating that all the investments made will liquidate in three to seven years. The venture capital firm will wait for each of the companies it invested in to either go public, or to be bought out by another company. In either case the venture capital firm will have made a lot more money than they originally invested into the fund.

How to raise startup venture capital

It can be very challenging for entrepreneurs to raise startup venture capital; one can no longer go to a company and pitch an idea. Most entrepreneurs are more likely to get money from their own pockets and try to get their business afloat. A good business plan is key when looking for startup venture capital; if a company can see that your business will succeed they will be more likely to invest.

Be aware that when a company gives you venture capital they will want to own a big chunk of your business. They will often want to control your board of directors so that they can make sure your company is making the right choices when it comes to business practices.

You can look for partner investors or "angel investors" which are wealthy individuals, often prior business owners, that are willing to invest anywhere from ten thousand dollars to half a million dollars in your company. Be advised when seeking venture capital that the angel investors are looking for a charity project; they are in it to make money just like you are.

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