Friday, May 31, 2013

How to Find Social Venture Capital Companies

Socially responsible investing (SRI) is the practice of investing capital in companies that pursue socially responsible business policies. Find venture capitalists interested in promoting socially responsible companies by learning more about the SRI community and finding investors with a history of SRI. Show investors you make money and you may tempt ordinary venture capitalists into socially responsible investing. Read on to learn how to find social venture capital companies.

Suggestions

  1. Visit the National Venture Capital Association website to learn more about what qualities venture capitalists are looking for in companies. Ensure your company attracts SRI venture capitalists by assessing your company in terms of your environmental, social and ethical policies. Be able to prove you practice SRI criteria like environmental sustainability, community activism, shareholder participation and that you have a positive work environment with employee benefits.
  2. Attend venture capitalists conferences dedicated to investing in socially responsible companies, such as those held by the Investors' Circle. Present your business to venture capitalists interested in socially responsible investing.
  3.  Contact a financial services professional who specializes in finding venture capital. Express your desires to focus on those individuals and companies investing in socially responsible ventures.
  4. Review the past investments of venture capital firms. The information is often found on their websites and in their promotional materials. See if investments have been made in companies dedicated to instituting business policies that are eco-friendly and sustainable over time.
  5. Investigate government funding for your business activity. Contact the Small Business Administration for a list of resources in your area. Ask about other government programs for small businesses. Check your state's Business Development Office and your local Chamber of Commerce for sources of SRI in your community.


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How to Talk to a Venture Capitalist

Securing venture capital is a critical turning point in the life of a start-up company. Venture capitalists do not just bring money to the cash-strapped start-up, but also offer counseling in running the company because they want to eventually sell their stake at a premium. However, they are inundated with investment opportunities and are selective in the type of operation they back. Entrepreneurs should consider the following steps in applying for capital.

Suggestions

  1. Compile a list of venture-capital companies. An important source is fellow entrepreneurs who have received such financing. These investors prefer referrals rather than cold calls.
  2. Pick investors who prefer your industry and firm profile. Venture capitalists specialize in certain industries. Most will avoid very young start-ups without track records.
  3.   Prepare a terse and intriguing "elevator pitch" for the immediate encounter. An elevator pitch is a proposal that can be explained in about 30 seconds.
  4. Be prepared to go into details on the business and how it will generate income, the management's (your) qualifications and the structure of the investment.
  5. Give meticulous attention to the potential market for your products. Avoid making crude statement such as "All we have to do is get 1% of the market." To investors the question is "How?" or, more importantly, "Why not 99% of the market?"
  6. Answer all questions clearly and honestly. Venture capitalists do not have the time for coyness or vague answers.
  7. Do not exaggerate and do not hide important problems. Venture capitalists are seasoned entrepreneurs turned investors; they can spot lies and problems.
  8. Do not press for an immediate decision. Ask an indirect question such as "If we assume what I just presented in the business plan is correct, could you please comment on it in general terms?" If you feel he is not forthcoming, try offering him certain investment terms or concessions.

Tips 

  • Venture capitalists like to see the management team in place; statements such as "Key employees will join our team" can be a put-off to them. Avoid too much emphasis on patents. What is worth copying will be copied; the important issue is commercialization. Do not take your lawyer to the negotiations. Lawyers often are combative and argumentative and concentrate on what can go wrong.

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