5 Attractive Benefits of Engaging a Venture Capitalist That Go Beyond Funding

Raising money by engaging a venture capitalist brings with it benefits such as expertise, value, connections, and a lot more that go beyond funding.

Over the last decade or so, the world has seen a rapid increase in the domain of startups. With increasing innovations and the scope of expansion in the technological sphere, there's a new idea popping up in every corner of the world by the second. But not every startup has the fortune of making it big. Not every startup gets the much-needed kickstart in the industry to grow and carve its base. That's where Venture Capitalists step in. Venture Capital companies are the analysts that consider the pros and cons of each startup and break down the scope of their actual potential to grow, as against the projected growth. They then bring in the 'seed money,' in exchange for a 'share,' also known as equity, in the startup. But what are the benefits of engaging a venture capitalist apart from the cash inflow? Let's find out!

The value of a Venture Capitalist goes way beyond the valuation

The funding that comes in with engaging a VC is undoubtedly a great help to any new business in the market. It not only improves the overall valuation of the company but also helps the innovator find new avenues to expand the business. But that's not all. Venture Capitalists come in with their own share of expertise and technical know-how that helps guide businesses in the right direction. With active participation in the day-to-day activities of the business, they encourage business owners to take risks that they wouldn't have taken otherwise. With solid financial backing, valuable strategic expertise from the VC, and a direction to focus on, startups are able to scale their business and find their footing in the industry at the right time.

Networking, connections, and market expansion are always a plus

Venture Capitalists are usually well-connected in the industry. As a startup looking to find your ground, having access to the big wigs in your sector is always a plus point. It not only helps garner interest in your business but also pushes your small entity towards becoming a brand name that clicks. Venture Capitalists introduce entrepreneurs to other industry leaders and further help in opening the doors to other markets. By tapping into the VC's network, startups can build their reputation, recognition, networks, forge new partnerships, and even look at potential future investors.

Venture Capitalists are the doors that open when others turn you away

When you're just starting out in the industry with an idea in mind, it can get hard to find people to put their hard-earned money into your idea. Most banking institutions turn their backs till you don't show up with a concrete growth projection plan based on realistic figures and charts. However, VCs are the companies that are ready to invest in ideas based on their potential to grow. With experts on their board, VCs are able to gauge the difference between an 'idea' and a 'scalable plan'. Venture capital financing focuses on the business plan and its potential to grow into something that would not only become a well-known entity but will also help them get heavy returns on their investment. So, if you have a strong enough business plan with a conviction to succeed, engaging a VC might be your biggest chance at entering the market.

Increased score on the ownership and employability scale

Taking a business from zero to a hundred takes manpower. You need people with expert knowledge and experience on the board to help take the right decisions for the company. Thus, if yours is a new business that has no leaders in the management, such as the Chief Technical Officer (CTO), Chief Operating Officer (COO), or Chief Financial Officer (CFO), then a venture capitalist can help you pool in the right candidates to form an efficient management.

Secondly, the employment sector is smart today. Any potential candidate would do their research on your company's profitability and stability before making a decision to join you. Thus, the benefits of engaging a venture capitalist also include adding your business to the list of 'trustable entities' when it comes to employment. It projects a lower risk factor and thus makes you eligible to hire from the right pool of talent.

No obligations to make recurring payments, or pledge personal assets

When you raise finance via debt or take out a loan through a banking institution you're always obligated to pay back the amount along with the growing interest. Moreover, in many scenarios, you may even be required to put down your personal assets as collateral for an unfortunate circumstance of your business collapsing in the future. However, when you raise money by engaging a venture capitalist, these obligations turn to zero. VCs invest in your company in exchange for a share in the equity which makes them part owners of the company. They take a share in profits equivalent to the terms of the agreement and minimise your obligations towards them. In case of a shutdown, you're not obligated to pay back the invested amount to a venture capitalist.

Financing by way of venture capitalisation is at times the best option that you can go for. The benefits of engaging a venture capitalist go beyond the monetary aspect and actually help you shape your business, hire the right team, and build your network in the industry, all in a safe and secure manner. With Sharks Fund on your side, you get access to a pool VCs who can help you take your business to newer heights.

4 views0 comments