Playing with toys when I could be using the big boys. Hmmm.
I have a side job that brings in a little bit of money to my family to help pay for some bills and a little bit of “extra goodies” money. This isn’t anything that’s going to save the world in three days, but it is enough to provide for things that we’ve wanted and we want to get done.
I funded my own start from scratch with less than a hundred bucks and am doing much better than that now. Looking back on the initial part of this process, I realized that it could have been so much faster if I had some capital to work with up front. This is something that most companies in the startup realm know. Learning what money means to you is an important first step.
They aim for some type of capital investment to get things going off much quicker. Huge investment venture capitalist firms like Y Combinator, Oak Investment Partners, and 3i are made specifically to get folks up and running. They also do a few more things that will pique your interest. Let’s talk about three examples of venture capitalist approaches that are out there.
1. Early Stage Financing
This is where the venture capitalist company, or sometimes an individual (think ‘angel investor’), goes in and provides seed money to get things up and off the ground and running quickly. This doesn’t necessarily mean that the startup company has a product to market to the masses.
Their main product offering should be pretty close to release though because most venture capitalists wouldn’t invest in just an idea that doesn’t have some type of proof or vetting. However, this money is basically a high risk investment into a promising plan for future success.
2. Expansion Financing
This is money that goes into a small company that already has something to sell, that already has a certain market, or that already has certain things going in an overall favorable direction. This investment money would help branch out or build up processes now to leverage those resources into phenomenal growth for the future. This is the part where the company expands and venture capitalists benefit along the way. Well, everyone benefits, but those VC firms are sitting pretty for sure.
3. Buy Out Financing
Closed – but in a good way. $$$
This is where the venture capitalist company will supply money to help either buy out a company outright or to buy out other branches of other companies to bring into the focus company. This is primarily to leverage the resources of those other companies into greater output for the focus company.
This is relatively complicated, but does happen quite a bit. With the appropriate amount of research put into the process, it can be shown that buying out a portion or a company (or sometimes the whole company from a different organization) would actually save more time, income, and resources than trying to build out that branch from scratch at the focus company. Venture capitalist firms know this and that’s why they do it.
Venture to Adventure Through Capitalism’s Finest
Three great examples of venture capitalist types are the big guys out there that throw money at early stage financing, expansion financing, and buy out financing. Start thinking about how your business could grow phenomenally with some type of capital input. You really could save the day and pave the way for a faster future. Just keep your patience in check and know the future is in your grasp.