The size of required investments
The majority of venture capital firms work under the projects demanding investments from 250,000 to 1,500,000 dollars. The typical venture capital firm receives more than 1,000 inquiries a year. Possibly 90 % from them will be dismissed rather quickly because they don’t correspond to the geographical, technical or market policy of Venture firm — or because inquiries, business plans and applied documents have been badly prepared.
The remained 10 % are carefully researched. Firms hire advisers to estimate the final goods or services, especially, when it is result of an innovation or highly technological production. The market potential and business competitiveness are checked, coming into contacts with available and potential buyers, suppliers and others. Production costs are analyzed. The financial condition of the company of the applicant proves to be true audit inspections. The legal form and legality enterprise registration is checked.
The especially carefully Venture firm estimates competence of administrative shots of the enterprise since their competence and experience is a unique guarantee for the Venture Investor that the enterprise will be successful.
These preliminary researches can cost to Venture Firm both 2000, and 3000, and 10000 dollars, therefore the firm won’t conduct research and bear these costs if the project isn’t interesting to the investor, the sense of the project isn’t clear – what it will have, what will invest, and even simply if the business plan is constituted with grammatical errors, and etc. Of those remained 10 % of inquiries after checks interest will remain only by 10-15. These are exposed already to more complete and more expensive checks then there are only 3-4 projects! Finally, the firm invests the capital in one or two of them. Thus it is necessary to notice that in this business there is no roundabout way, the godfather, the matchmaker which could influence on positive decision of the investor. Nothing will force the Venture Investor to invest in the project of which he isn’t assured since he risks own money or money of the investment fund.
Maturity of the firm representing inquiry
Unfortunately, the majority of inquiries proceeds from the firms have small profit or debts and they for investors are unattractive. Interest the enterprises represent only, capable productions to expansion, introduction of the new goods promising a great demand and profit. It makes sense to such enterprises to give investments and to provide their fast growth. The enterprises which only will be organized, can interest only some Venture Investors if the potential of the enterprise and benefit essential to them can be reliably identified and estimated. Though the majority of venture capital firms won’t consider at all very many offers on creation of the new enterprises, but nevertheless there are some which agree on it. Even the small enterprise which has well thought over both carefully prepared business plan and which will prove outstanding performance of the project and that its managerial personnel possesses exclusive qualification and practical experience (let even at other enterprises), has chances to receive necessary investment.
Administrative shots of the enterprise
The majority of venture capital firms concentrate first of all on competence and experience of a management of the enterprise-applicant. They know that even the mediocre goods can be successfully made and sold skilled, vigorous and effective group of managers. They want to see a command of heads which is capable to work together much, easily and productively, especially in the conditions of stressful situations and a severe competition.
It is very reasonable that government, despite this crisis is not leaving to help small businesses. And small business grants can be a true helper today.
But, of course, you should remember that today the fight for small business grants as well as for other types of grants is harsher. This is logical – more businesses need them. So before you start your battle for the small business grants, please visit this blog for more
details about grant industry.