Can you use a venture capitalist to fund a home business?
The amount of money that is usually loaned from a venture capitalist is in the millions. So most small home businesses would not fit the criteria that the investors are looking for.
With this in mind, you will want to consider that obtaining funding from venture capitalist for a home business would be on the more difficult end. That is unless there is a plan for the home business to become much larger and possibly becoming a public corporation.
If using venture capital is still the plan you are looking into for funding your small business, keep in mind that you will need to be prepared to offer adequate planning, return in funds and experience to obtain these goals.
For instance you will find that many times venture capitalists fund the .Com businesses. This is because these types of ventures tend to pay out and become public within a few years time. The time frame for the turn around is roughly 3-7 years.
If the companies that the venture capitalists do not intend to become public, then it is common for the invested companies to be liquidated to return the funded monies. This applies to the fact that the money would then need to be returned or refinanced in some other form.
The funds from venture capitalists are usually obtained with the plan that the business would grow very large in a very short amount of time. Therefore promising the return of funds in that short amount of time.
The funds from venture capitalist are usually set up in an open fund, for the needs of the business. If this is not the type of funding a small home business is looking for, then it is better to find more suitable ways of obtaining the start up money.
The other ways to obtain that money for start up by using savings, loans on savings, investment funds, or boot strapping with another company.
If however you want your home business to grow quickly and are not financially in a position where you can fund the start up on your own. The venture capitalist will work with you as long as you meet their requirements.
There are companies that are set up to specifically fund several small businesses to get them to go public. This is because they will benefit from the investment for both tax purposes, and financial gain.
Though in order to meet these requirements you will need to have a plan in place, that includes the start up, pay back, marketing plan etc.
So the short answer to if you can use venture capitalist to fund a home business is "Yes". However, there is much more to using venture capitalists fund than simply asking for it. There needs to be a great deal set up in place to even be considered.