All great businesses start small. AT&T, Verizon, ADT, Texas electricity providers and even Nintendo – they all had small starts going from humble beginnings to the business giants you know and love today and new businesses are being born almost every hour in hopes of striking it out of the park and becoming industry greats like those who came before them. However, in this country and in this economy it can be difficult getting your business off the ground and, sadly, without the right amount of hard work, funding and marketing, your dream could be over before it even starts.
But how does venture capital come into play? Venture capital is financial capitals that is awarded to high risk yet high reward companies that are just starting out. With the market being as competitive as it is, some new businesses with limited operating history just can’t make the kind of capital that they need on their own, which is how venture capital can really be beneficial to a struggling startup. However, as a general rule, venture capitalist are usually very selective about the business that they decide to invest in often looking for defining characteristics like new or novel uses of technology, a well-thought out and convincing business model and ways in which their investment will pay them back in the long run.
It is actually estimated that many venture capitalists invest in about one in every four hundred businesses that are up for review. These investments are rare, but not unreasonable – especially when you consider the risk.