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Basics of venture capital funding

Among the many challenges associated with getting a new business venture off the ground in California is the issue of how to fund it. Many grand ideas may well have never come to fruition because money was not available to make it happen. Venture capital money can offer entrepreneurs the cash needed to do this. However, it is important to carefully assess the pros and cons of accepting VC funding before jumping in.

As explained by Techvibes, one of the attractive features of venture capital funding is that there is no need to repay the money as with a bank loan. Investors know they are essentially taking a risk that may or may not pay off, literally. In addition to carefully evaluating a company's plan and its leadership, many venture capitalists may request a share of the business and even some say in how the company is run.

These VCs can offer valuable insights and even industry connections but their choices about how to operate the business may not always align with the founder's. Here is where some problems may arise. To this end, Forbes recommends that entrepreneurs carefully review each potential investor to determine the potential level of compatibility. They should also not be afraid to refuse money from an investor if there are concerns about differing styles down the road.

If a good match is found, entrepreneurs should obtain enough money to support their needs for at least a full year if not 18 months to allow them time to focus on growing and developing the business instead of searching for more capital.



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