Every small business needs funding. In the 21st Century, there are more funding options available to small businesses than you can shake a stick at. From modern options like crowdfunding to the more conventional approach of a small business loan, there are plenty of ways that you can fund a new business. Of all the options available, venture capital is the best choice for many businesses. Below are some of the key advantages of funding your business through venture capital.
Raise Lots of Money Quickly
The main benefit of venture capital is that it provides small businesses with lots of money very quickly. Building a business up from scratch and funding it only through the money that it generates may be a rewarding journey, but it is also a long and difficult approach. Venture capital can provide more money more quickly, which lots of new businesses need.
Take a business-like Shift as an example. Shift provides moving services across the UK. Customers tell them where they are moving from and to, Shift does the rest. But to operate, they require a fleet of vehicles. With just one or two vans to their name, it would be challenging to serve enough customers to make a decent profit. With the kind of cash injection available through venture capital, major purchases like these are much more realistic.
Help Managing Risk
Starting a new business is never without risk. No matter how carefully you plan beforehand, or how hard you work after launching, you will always have to contend with the serious challenges that come with building a new business from scratch. For entrepreneurs who have never run a business before, the risks are even more significant.
Taking money from Venture Capitalists means that businesses can bring onboard people with experience and portfolios to their name. The majority of new start-ups fail in the first year. Having a venture capitalist on board to guide a new business can significantly reduce the likelihood of failing.
No Monthly Payments
Venture capitalists invest in a business in exchange for equity. If you take out a small business or personal loan, you get to keep all the equity in your new business. However, you have to make monthly repayments to your lender. For many small businesses, the less money they have to pay out every month, the better. Every business has expenses that eat into their profits. With a venture capitalist on board, you eliminate at least one common business expense.
Increased Networking Opportunities
Venture capitalists can bring their network of contacts to the table when they invest in your business. It is hard to overstate just how much of an advantage it can be to have these contacts available to you from the very first days of your business’s existence.
Not only will venture capitalists bring their existing contacts with them, but they can also provide you with access to any future contacts they make.
These are just some of the benefits that venture capital offers to new businesses. When you are considering your funding options, make sure to look into VC funding.