Innovation keeps us moving forward. New ideas, projects, businesses, and companies are trying to make our lives easier and more productive. Getting a startup going can be a challenge, so many experts advise pairing up with a venture capital firm to show you the way.
David Kezerashvili, a prominent venture capitalist and angel investor, has always encouraged startups to bring on venture capitalists. In addition to the capital they bring to the table, experience and advice can direct them towards success.
He argues that venture capitalists have an essential role in the startup ecosystem. In this article, we asked him why VCs are crucial to startups and how these businesses can find one that will tend to their needs.
Advantages of Hiring a Venture Capitalist
There are several benefits of getting venture capital on board. Besides increasing capital investment, they can provide input on your operations, introduce additional investors and bring in partners. Below we give you the top 5 advantages of hiring a venture capitalist.
Raise Funds by Bringing Investors
Venture capitalists have one goal in mind – to help the business grow to its full potential. That is why they will find the right investors with the patience and wealth to fund the startup. These investors may be other firms or companies with experience in the field. Not only will VCs help a startup raise the needed funds, but they’ll also guide it on how to use them.
This way, you can skip the hassle of getting a small loan that may not even be enough. So, with a good venture capitalist, your startup will get access to more initial income, which otherwise can be hard to obtain.
Leadership and Understanding the Business Model
Many venture capitalists have built their own startups in the past. This gives them market experience that can be invaluable to a new company. These individuals have studied the industry and sat through all the business meetings, so it’s safe to assume that they are experienced in solving the problems that may arise. They know how to scale a business and can monitor your financial performance. Some might even give you tips on your social media marketing. Even if they haven’t had a startup before, in most cases, they have had experience assisting other businesses and have a team around them that can help grow your project or idea.
Follow Market Trends and Networking
As for most startups, the beginning is challenging. You will be focused on the work and most likely won’t have time to follow what is trending or network with people. A venture capitalist will not only give you advice but will also bring in the right people with whom they have formed a relationship over the years. Getting access to this network can build new partnerships with your startup, bring in clients and customers, help find valuable employees for your business, and in the future, help raise funding.
Negotiating Financing Deals
As mentioned before, with all venture capitalists’ connections, investors will show up at the doorstep of your startup. It is one thing to bring them in, but it is another to negotiate and finalize a deal for investment. Again, a venture capitalist will have a team around them that will oversee the finances and will calculate whether you are getting a good deal. After the funds are in, they will also help distribute them where they are needed most.
Collaboration With Industry Experts
Since venture capitalists don’t come alone, but they bring a team along the way, it’s bound that your startup will get an expert opinion at some point. Experts will give input on where the startup is on the market and how it can grow.
For example, the tech market has seen an increase in players. So, experts from the tech field will give their opinion on where your startup can improve or make a change.
Plus, this may leave room for collaboration with other startups. Making connections early can give you a huge leap toward hitting your goals.
Why Going Solo is Risky
Startups are always demanding at the start; however, they can be immensely successful if you devote enough time to them. While you might believe in your idea or have mastered the product you want to present, if you do not have the money, proper connections, or don’t know how to play the market, things will crumble.
That is why hiring a venture capitalist can throw out some of your problems. While you have set the building blocks, a venture capitalist will bring in investors, give advice and construct a business model that will make your startup grow.