When your startup starts growing, at some point, you will require additional funds for expanding your business. You will have several finance options at your disposal to support the growth of your startup, like angel investors and venture capitalists. While an angel investor can offer you between $10,000 and $100,000, a venture capitalist can give you up to several million dollars. This means that with the support of a venture capitalist, you can quickly move up from seed funding to higher stages.
What is Venture Capital?
The term venture capital is somewhat self-explanatory. It is a form of financing where a firm or group of investors provide high-risk capital to young, promising companies with the hope that they will get a substantial return on investment down the line. This special type of investment is regulated by several laws that are found at the federal level, and are controlled by the U.S. Securities and Exchange Commission (SEC).
How does Venture Capital Works?
Typically, a venture capital firm is a part of a group of wealthy investors that offer monetary support to startups they think will provide them with great return on investment in the future. They provide funds in exchange of ownership of the business or equity. The end goal of providing venture capital is to sell a part of the company or hold an initial public offering when it has grown enough to offer substantial profits to the venture capital firm.
However, not all startups can get funding from a venture capital firm. They first thoroughly examine and analyze factors such as the core competencies of the company, how capable is the management team, what sort of competitive advantage the company has, how attractive and large the market size is, the financial standing of the business, and several other criteria.
Apart from offering money, some venture capital firms also offer business insights and contacts to key players of the particular industry, so that the startup can grow at a rapid pace.
How can a Business Law Attorney help you?
When you hire a business law attorney to help you secure a venture capital for your startup, they work with you at every stage of your business growth, i.e. from seed funding and initial formation to venture capital financing. They are aware of the current trends and ins and outs of the industry and can provide you with practical and legal advice. Not only that, they also speed up the process and make sure that the deal closes on a positive note.
With a business law attorney on your side, you can get assistance in:
- Organizing venture capital funds
- Structuring and negotiating VC transactions as well as down rounds
- Representing startups when seeking venture capital from investor firms
- Reorganizing startups during the preparation for a venture capital investment
- Helping to avoid early venture capital lock-ups
For more information on how hiring an experienced business law attorney can help you with venture capital and other corporate matters, contact the Law Office of John C. Grundy at 330.637.9030 or online to schedule your consultation today.