The process of obtaining venture capital

Unlike with angel investors, who invest their own money, venture capitalists have a much stricter process in making their investments.

Know that venture capitalists have a big responsibility on their shoulders because they are investing other people’s money, so they want to make sure that the money they invest will go into a business that is more than likely to be successful.

Venture capitalists and other institutional investors have to answer to the people who hold the funds that they invest.

 This means that venture capitalists will want to see that the companies they invest in are successful and will eventually gain profits.

These same venture capitalists are also judged by how their investments are performing and are also compensated for the investments that provide a high return.

Hence it is in their interest to have a very strict investment process, which makes entrepreneurs have to prove to the venture capitalists that their company is worthy of their investments.

In most cases, venture capitalists usually will invest in companies with a large market potential with the potential yearly cash flow of at least $20 million and are looking for growing companies.

Many venture capitalists were also either entrepreneurs or held key management positions in companies themselves.

Hence, they will invest only in the industries they have experience in.

This is because venture capitalists who worked in a particular industry know that industry very well, and their experience in that industry enables them to make decisions that manage the risk when they invest in a particular company.

Furthermore, upon exit, venture capitalists intend to make at least 15% on each of their investments.