Venture capital is a form of financing where prominent investors and institutional lenders put their money into those start-up enterprises that they believe have the potential for long-term growth. They do this by buying the shares of such companies in order to becoming their investment partners. In many cases, the entrepreneurs of such establishments need to depend on such monetary resources to operate their businesses, as they do not have adequate access to other capital markets. As the risk, these investors undertake in such corporate deals is very high, they usually impose their views on the decisions these companies take. This is the reason why experts also refer to this form of business funding as risk capital.
Amit Raizada, a venture capitalist from America with years of valuable experience under his belt, holds the view that an investor offering this form of finance should ability to identify and promote businesses that have a high growth potential. He goes on the say the entrepreneurs of small start-up businesses should look for the following qualities in the venture capitalists:
- A keen observer of market trends
A proficient venture capitalist needs to have the ability to recognize how the financial markets are developing around the world and reacting to the introducing of new technology. This enables him/her to have a clear insight on which start-up businesses to invest in so that he/she is able to earn very high returns in the long-term. This trait sets him/her apart from other financial investors.
- A good judge of character and teams
Investors offering this form of finance need to a good judge of human character in order to identify those entrepreneurs whose start-up businesses have the potential to stand apart. This enables them to put their money in those businesspersons who can ensure their enterprises gain the competitive edge in the market and change the world.
- Asking the relevant questions
A venture capitalist should know what questions to ask when entrepreneurs of small start-up businesses approach them with their deals. This gives them the opportunity to know about the technology, products and services these businesspersons are going to offer the public and their market environment. The answers to such queries should give him/her the information he/she needs to know on whether or not the investment in these businesses is viable.
When entrepreneurs of start-up businesses approach venture capitalists with their proposals, they want to know whether their strategies are viable. In addition to this, they want these experts to tell what they are capable of achieving by going ahead with such deals and what their business establishments are worth. It also offers these proprietors an opportunity to recognize their own limitations and take necessary steps to overcome them.
- Providing an opportunity to deserving entrepreneurs
Venture capitalists only invest their money in start-up business that they feel that the entrepreneurs of these establishments have an edge over others in the marketplace. They have the potential to operate their business in such a manner that they not gain the competitive edge but yield high returns for their investors.
Amit Raizada says that the above attributes go a long way in helping venture capitalists stand out among the crowd.