Raising Venture Capital - The Alternative Golden Rule

The economic translation of the Golden Rule "He who has the gold makes the rules." If you have venture capital, then you need financing. Have the more you need it, the less control you will be at the end of day.A typical business scenario I see is:

I have a great idea or a product, and I'm going to start a business, although I have no financial resources to put myself into it.
I can scrounge up one or two hundred thousand dollars in the form of loans, grants, credit cards,a few early sales, etc.
I have worked on this for a year and can really see the potential, if only I have the money to hire vendor had to build a factory, hiring production employees to buy server ...
I worked for a year and a half and I'm tired of being poor, but I will not give up on my idea. Hey, I raise venture capital.


At this point, the entrepreneur is very close to despair and is willing to give up, just to get control of all for a decent, steady salary. The otherScenario is increased, the company already has a certain amount of money, either friends and family or angel, and the money is tight. This business is really desperate and is willing to give up, not only for control of all its transactions alive.Venture capitalists hold very large risk carriers. To check carefully any investment and the investment management team prior to the decision. Once they have decided that the company has a good chance of success, they insist on a variety ofControls to ensure that they can keep in check on the business, including replacing the administration, though, necessary.Even if the VC holds only a minority of the shares, it is in its investor rights agreement, certain voting rights and protections (contained see my post "Elements of a Term) Sheet for definitions, that they have the ability to protect their investment.If you set up a business plan to ensure and believe that you might want one day to raise capital, you cando a few things to lose your business. First, have a plan for growing your business without venture capital. You may not be able to raise it, but if you are and you do not like the provisions of the term sheet, you can away.Second walk when you raise venture capital, are in the selection of investors to be cautious. Make sure that the investor is honest and treats his management team with respect and fairness. Once you have a term sheet, you can ask for a list of contact their CEOs'info. If the VC is reluctant to give information or give only a few, you may want to look for another investor. The CEOs will give you an honest opinion of the VC, so make sure you follow up.If you going to put your blood, sweat and tears into a company that you do not want it to be taken by an unscrupulous investor only for a number of investment dollars.

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