GET THE MONEY!!!
That is the mantra every entrepreneur should be saying to themselves throughout the day. The one thing every business enterprise needs is money! This may seem like a very trivial concept, but it is easier said than done. From trying to get your clients to pay their invoices, to motivating your sales force to make their numbers, getting the cash can be challenging, frustrating, and sometimes down right oppressive.
One of the ways to get money for your business venture is to look to the "Angels". Religious belief can sometimes be a very good thing in a capitalist economy. There are those individuals who are looking for that proverbial "help from above," and there are those looking to "spread the wealth" (even if ultimately it is self-serving). How do those seeking help communicate with those looking to help? If the "seeker" understands the lingo of the "helper," and is able to communicate its desires efficiently and effectively, then the heavens will part and the "Angels" will sing. Herein lies the problem.
Susan Schreter recently wrote an article, in the Seattle Post-Intelligencer, that addresses the concerns entrepreneurs have when they are seeking venture capital financing for their enterprise. If the entrepreneur is able to speak and understand the VC lingo, then he/she has a better opportunity of getting the "Angels" to invest in the business. With great ambition, comes great sacrifice, and the VC’s are not going to willingly part ways with their hard-earned money, until they are assured of a few things. Due diligence requires the prosepective VC put the enterpreneur through a battery of tests and examinations with the objective of making sure the entrepreneur fully understands his business model. A VC is more willing to invest money in an enterprise if they are convinced the entrepreneur fully understands the inherent risks and liabilities, as well as the unlimited growth and potential, of the company.
Like any other test or examination, the better prepared the individual is to answer the questions, the better the chance is that they pass (or in this case GET THE MONEY). VC lingo can be very confusing to the unsuspecting entrepreneur. Venture Capitalists use terms like: burn rate, monthly nut, cash flow, break even, down round, seed-state investor, or pre-money valuation (just to name a few – whew!). The article by Ms. Schreter presents a complex and important topic in a very simplistic manner to help the reader get introduced to the lingo of VC investing. Start here, and then move towards books and/or an advisor.
Venture capital investing is important for some businesses, but not necessary for all. It truly depends upon what your future and short-term goals are for the enterprise. If an entrepreneur wants to quickly get into a business and then get out, or there is a high-cost of research and development for the product, then VC funding may be appropriate. However, if control of the business is important to the entrepreneur, or the long-term plan is to operate the business for the next 20 or 30 years, then VC funding may be moved down on the list of priorities for the business owner.
Please click on the following link for the article by Ms. Schreter: Inside Entrepreneurship: Mastering VC-speak helps court investors