New Business

If you are looking for capital for your business, you may be confused as to who to get it from – a venture capital company or private investor. Make no mistake, there are several fundamental differences, and you’ll need to educate yourself before making your decision.

A Venture Capital company is comprised of a corporate entity. They invest in businesses that are well established. They raise their money by pooling public and private resources. They have extremely strict criteria for being approved for funding and it could be a long process. They don’t usually take an active role in your business, or offer any sort of mentoring service to the businesses they invest in.

Private Investors, also known as business angels, are individuals who are independently wealthy and are business owners and entrepreneurs. They use their own money to invest in ventures. Private investors usually prefer to invest in businesses that are in the early stages; even if it’s just at the idea stage. They will take an active role in your business, also offering mentoring services. They will share their skills and experiences with you, and answer any ongoing questions or concerns. They usually require part ownership until such time that you are making a profit, and they get their return on investment. Private investors can be found in any country around the world.

Both venture capitalists and private investors will require an exit strategy to be put in place before partnering with you. This means that once they have achieved their ROI, and your business is running successfully they will take their profits and end your partnership. If you partnered with a private investor, you will have learned all skills and knowledge you need to continue running your business successfully for many years to come, regardless of economic conditions. They also both require extensive information before handing their money over. You will have to present a business plan, along with complete financial information so they can analyze your situation. Whichever option you choose, do your homework and meet with several different investors before signing anything.

One of the best websites in this regard is entrepreneurinvestornetwork.com.au, which aims at uniting angel investors looking for business investments in Australia with budding entrepreneurs in the country.Log on to the website today. You will not be disappointed.

Article Source: ArticlesBase.com - Venture Capital or Private Investor – Which One is Right for Your Business?