No, the investor needs you to keep running the business - you're the one who understands the operations and the customers. You need the investor for funding, so try to develop a good working relationship.
Yes, you're right! Some people refer to a venture capitalist as an "angel" investor. Make sure you select an investor who shares your values and philosophy of business management. Thenwork hard to implement the business plan, and you'll all earn money together.
No. Read this section again. Venture capitalists provide equity financing, not debt financing, and they earn a return (or profit) on their investment, not interest. (This answer more accurately describes a "loan shark.")
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| Lesson 4 Screen 10 | |
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Venture Capital To get the funding to open a chain of 10 repair shops, you need a much larger investor or even a group of investors. At this point, most entrepreneurs start looking for an extremely wealthy private investor or a group of venture capitalists who have a large pot of money and experience growing a small-size business into a larger company. In return, for putting up the capital you need, the new investors are going to want a considerable share of ownership (or “stock”) in the company. Also, they are probably going to want one of their key “players” sitting on your board of directors, helping make decisions about how the new chain of shops is operated. Why? Because they want to make sure they earn a good profit on their investment! You may have mixed feelings about this. Yes, it does mean that you are giving up some of your future profits. On the other hand, it also means you don’t have to face future debt payments. Maybe you will like having these more experienced partners to offer expertise and moral support. It might be worth it, and it might be the only way to get the money you need to grow your business.
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What is a venture capitalist? |
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