There are several good reasons why a start-up should consider venture capital support. Venture capitalists can get you the funds you need to get your business moving forward. However, if you give minimal thought to the risks ahead, you will not benefit from venture capital. Entrepreneurs can make their venture deals s safer in several ways.
Unless you want to remain entrenched at square one, know the basics. Learn all the terminologies and mechanics of venture capital. You must study the details and language of investment. Differentiate between common stock and preferred stock. Get comfortable with all VC concepts to avoid taking your shot in the dark.
It is important for entrepreneurs to surround themselves with people who raised money before. It’s a good idea for entrepreneurs to surround themselves with smart people. Mentors and people in incubators, accelerators or start-up communities have traveled the venture capital path before and can help you spot the landmines.
It is also important for entrepreneurs to understand investors’ interest. Your ability to change during negotiation depends on who has leverage. The relative negotiating power of an entrepreneur and a venture capital depends largely upon how beneficial to each is the option of not r making concession. To raise your likelihoods of attracting many investors, you must know their interests.