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A lot of people become aware of the term venture capital (VC) when they realize that lending institutions are unwilling to finance their business proposal. There is a huge difference between getting a loan from a lending institution (debt) and selling a part of your equity in the venture. Are you really prepared to have a new partner who will put specific controls on management of the business even though they will rarely participate in the day to day operations? Are you prepared to investigate what venture capitalists want (your idea may be good for you but may not provide sufficient potential for attracting VC)? Are you prepared to take the time to find and court venture capitalists (venture capital is much harder to find than looking for a bank loan and getting to know each other as potential new partners is a long process)? Are you prepared to have your business management abilities really scrutinized, and can you accept that they may require a management team or a better management team? Are you prepared to sell more of the company than you would originally have imagined? Those who have the money set the rules and it is not uncommon that almost half or more of the business may be owned by other shareholders. If you can answer "yes" to the above questions, you are ready to proceed.
Source: www.cbsc.org/alberta
Last revision on May 16, 2007
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