Launching a startup is becoming a more and more popular form of making business. These kinds of companies are often backed by some kind of investor. People who invest in startups are called Venture Capitalists.
Who is a Venture Capitalist?
Lots of companies need help and money in the first phase of their development. Many ideas cannot be brought to life because there’s no money to back them with; some missed strategic decisions may be very harmful for startups in the future. A Venture Capitalist is an investor who wants to back such small and still developing enterprises. An investor provides knowledge in many fields, e. g. management, but finances startup as well.
What is the purpose of such actions? Well, Venture Capitalists hope that the startup or enterprise they’ve invested in will develop in a very short time. They hope it will become much more popular and that their initial investment will result in a massive return because of the company’s success.
Is it Profitable for Both the Investor and Entrepreneur?
Entrepreneurs can get massive help at the beginning. There is a possibility of obtaining all the needed money for business development, as well as some professional help in many fields. Moreover, the duties of keeping a business functioning are divided between two persons, the business owner, and the investor. Because of this, difficult decisions will not be taken alone. as there is the possibility of conversing with a person who is known in the business world.
How Does it Look From the Investor’s Point of View?
They are familiar with risk and investing in a startup is another kind of risk (which they presumably want to face.) They know that their professional help may grant them a very high income when the company is successful. Moreover, this kind of cooperation is a great way for them to develop their own skills. Those practical hard skills but some soft skills as well.
To summarize, referring to Venture Capitalists is a way to obtain funds for your startup or small business at the first stage of its development. This is a great opportunity, but young entrepreneurs must be aware that their investor is only a human being and that they, too, can sometimes make some mistakes. However, it is a good solution when there is the need for experienced assistance or additional money for further innovation.