Most Of The Information You Have Been Reading As Regards capital Is Not Real

By BradMaximuson on January 21, 2011 In Business

Entrepreneurs and job experts have certain venture capital as a financing style between a capitalist and entrepreneur with an embraced goal of a handsome return in a short period of time, maybe 3 to 5 years. But while there are several material goods on the definition and characteristics of this topic, few have actually discussed the options that this type of profession set-up has.

Before taking the plunge, know what these options are and how they can be applied to your current profession plan.

The funding option depends on the stage of the company’s progress. Investment firms can invest from $50,000 up to $20 Million. If the company is still at its earliest stage, where a concept or invention is still to be developed or proved, the option is called seed financing. Here investment is spent on marketing and product development. Product ingenuity and market research are the areas being focused.

When the company has already developed its product and marketing strategy but needs money for the actual production and initial marketing, the funding option is called start-up financing. This is the accessible option for new entrepreneurs and inventors. Here funds are spent for the production and initial marketing. Amounts can range from $50,000 to $1 Million.

Sometimes a company already has its products and may have originally introduced them to the market, but receives little or no revenue at all. In this case, the entrepreneur may need financial assistance at this stage, called the numero uno or early stage. The backlog usually ranges from $500,000 up to $15 Million, depending on the extent of the changes that need to be made. It could be that the product needs to be revised or developed to make it more saleable, or it can be a mere repackaging or change in advertising strategy.

The next option is called the second or later stage. Here the company has its products and may have received revenues, and has the potential of making it big in the near future, but for some reason has no funds at hand. It could be that there are some loans that need to be paid, or other financial schemes that need to be complied with. That is why venture capital firms invest from $2-15 Million to help the company.

Some profitable companies want to expand, but does not want to put in more capital out of their own money. Their goal is not to keep the company for many years but for it to quickly grow in order to make an IPO within a few months, say 3-18 months. This option is called the third or mezzanine stage. Amounts range from $2 Million to $20 Million.

Similarly, this next option needs an investment before an IPO, but the time frame is within 3-12 months. This is called the bridge. Investment is also between $2 Million to $20 Million.

Remember that there is a particular option for each stage that your company has. The key is to know what options to use. Similarly, you must know where to get these venture capital firms. You must also develop a concise but comprehensive profession proposal to present to them. Lastly, keep in mind that venture capital is not the end-all but just the beginning of more challenging things to come.

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