I am forming a big company, and I need a lot of capital to get it off the ground. A friend told me to look into venture capitalists, and I did, so I figured I would ask you all. What is the best way to get venture capital and how does it work? Thanks!
from http://en.wikipedia.org/wiki/Venture_capital Venture capital is a type of private equity capital typically provided by professional, institutionally-backed outside investors to new, growth businesses. Generally made as cash in excange for shares in the investee company, Venture capital investments are usually high risk, but offer the potential for above-average returns. A venture capitalist (VC) is a person who makes such investments. A venture capital fund is a pooled investment vehicle (often a partnership) that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans. also, you may want to took into angel investors (known as a "business angel" in Europe, or simply an "angel") is an affluent individual who provides capital for a business start-up, usually in exchange for ownership equity. Unlike venture capitalists, angels typically do not manage the pooled money of others in a professionally-managed fund. However, angel investors often organize themselves into angel networks or angel groups to share research and pool their own investment capital. Angel capital fills the gap in start-up financing between the "three F"s (friends, family, and fools) and venture capital. While it is usually difficult to raise more than US$100,000 - US$200,000 from friends and family, most venture capital funds will not consider investments under US$1 - 2 million. Thus, angel investment is a common second round of financing for high-growth start-ups, and accounts in total for more money invested annually than all venture capital funds combined (US$24 billion vs. $22 billion in the US in 2004, according to the University of New Hampshire's Center for Venture Research). from http://en.wikipedia.org/wiki/Angel_investor also, take a look at the ACA directory at http://www.angelcapitalassociation.org/dir_directory/directory.aspx Basically, have a really good, well though out plan.
My site is specifically designed to appeal to businessmen and investors. Should I start advertising my site and get the word out there that I am in need of capital in an attempt to get them somewhat interested? Or would I be better to just approach them from the start?
Your best bet would be to have a functional site/service in place, promote the shit out of it yourself in a short period of time, score some results, then start looking for investors. If you have a functional product VC's will be more interested in investing, especially if there's little to no competition and you've done your homework well on the business/marketing plan.
Some caution though, if you have already developed the idea then you get stuck between angel and VC. Angel is usually pre launch, VC for a developed property. It's not impossible to get something in between (I managed $2m in my last company) but it is a harder stretch.
There's an excellent article in the May 2007 edition of Entrepreneur magazine regarding the use of Venture Capital databases to find investors for your company. BuzzLogic credits the Growthink Research database for helping it find investors for its $9.6 million Series A funding round which closed earlier this year. http://www.entrepreneur.com/magazine/entrepreneur/2007/may/177098.html