how to become a venture capitalist

A venture capitalist (VC) is a person or organization that invests money in a business expansion or start-up. In exchange for the capital investment, the venture capitalist receives a share of the company in the form of stock, a position as a controlling manager of the company, or both. If you have a new or existing business or a business idea and are looking for financing, a venture capitalist may provide the help you need. To find one, follow the steps below.

Steps

1
Check with venture capital associations. Venture capital associations provide various tools and resources to entrepreneurs and small businesses in order to assist them in locating the right venture capitalist. There are many national and regional associations available to those looking for funding. National VC associations include:
- The Small Business Administration's ("SBA") Small Business Investment Company ("SBIC") program. This program can help you locate firms willing to invest in your business. The program was created by Congress in order to provide start-up and expanding small businesses with venture capital. SBICs are licensed and regulated by the SBA.
- The National Venture Capital Association. The NVCA, which can be found online at http://www.nvca.org, is a trade association that provides services and resources to VCs and entrepreneurs including links to venture capital organizations, software and technology development tools, and industry data and information.
- Gust, formerly known as Angelsoft. Gust provides users with a searchable database for locating investors and allows them to contact the VCs in order to apply for venture capital directly from the Gust website.
- The Angel Capital Association. The ACA provides businesses and other entrepreneurs with information on preparing for the funding process, a listing of professionals, such as attorneys and accountants, who work with those seeking funding, and a listing of member VCs, which includes links to the firms' websites. You may visit the ACA online at http://www.angelcapitalassociation.org.
2

Ask around. Corporate attorneys, successful entrepreneurs, and business brokers can be good sources of information when it comes to finding a VC in your area. Check with your colleagues, the popular social networks, and business associates in your area for the names and contact information of VC firms near you.

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3
Use the Internet. It can be a valuable tool for locating venture capitalists who may be interested in investing in your business start-up or expansion. Some ways that you can use the Internet to locate a VC include:
- Finding and subscribing to venture capitalists' blogs. Many VCs use blogging as a way of promoting their business, interacting with entrepreneurs, and socializing with other venture capital firms. Some web pages that can help you locate venture capitalists' blogs include The VC Blog Roll, 100 VC Blogs, and TechFiltered.
- Searching for VCs on social networks. Many venture capitalists use social networking in order to promote their businesses and interact with entrepreneurs and other investment firms. Sites such as Twitter, LinkedIn, and Facebook are good places to start your search for a venture capitalist to invest in your start-up or expansion.
- Checking top VC lists and online databases. Many websites allow users to search for VCs based on specific criteria such as industry, location, business state, or amount of funding needed. Some popular lists and databases you may want to search include Top 100 Venture Capital Firms, VC Search, and Find the Best .
4
Do some research. Finding a VC is more than looking up names and contact numbers in a directory. You want to find a venture capitalist right for your company or business idea. This means doing some research to find out everything you can about the VCs you are considering. To locate information about various VCs, visit their website, check their Twitter, Facebook, and LinkedIn posts, and read their blogs. Some things you should know about each VC you are considering include:
- At what stage of a company's development the firm typically invests. If a particular VC invests in established businesses only, you may not want to pitch your idea for a start-up to that firm. Narrow your list of firms you will contact by crossing off any that do not usually invest in businesses at the stage yours is currently in.
- In what types of companies and/or start-up ideas the firm usually invests. Many venture capitalists limit investments to specific industries or start-up ideas. Some may make only very large investments, those that exceed $5 million, for example. Therefore, you may want to cross off any firms on your list that do not invest in businesses in the same industry as yours, or who have a minimum investment amount which exceeds your capital needs.
- The firm's exit strategy. VCs are short-term investors who will want to cash out at some point. Cashing out may mean selling the business, making an initial public offering ("IPO"), or merging your company with another. You may want to eliminate firms who have an exit strategy that does not fit well with your business plans.
- The management style of the firm. Because many venture capital firms wish to become very involved in the businesses in which they invest, you may want to eliminate those who have requirements that are too rigid for you or just not in line with your intentions.
5

Check references. Not all VCs are created equal. You want to find one that will help make your business successful. Check the firm's references to determine how many successful deals it has put together, if it has previously worked with companies similar to yours, and how successful the firm's most recent deals have been. A legitimate venture capitalist will be willing to provide you with references, and many maintain websites where they publish information about their most successful deals and clients.
6

Hire a professional. There are many venture capital consultants, corporate attorneys, and other professionals available to help you find the VC that is right for your company. These professionals can provide advice for increasing profits, help in obtaining traditional financing, and packaging and marketing your product or business to venture capitalists.

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How safe would it be to reveal my business idea to Venture Capitalist?

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Community Answer

You could have them sign a non-disclosure agreement, which legally keeps them from sharing or copying your idea. It doesn't always work, but it's your last line of defense.

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Use investment portals to your advantage. GetCapital.org is a great resource for connecting entrepreneurs with investors across the globe.
Obtaining venture capital can be difficult, so you may wish to consult with a financial professional to help you through the process.

When using a venture capital consultant, be sure that he or she is licensed and/or registered in your locale. The activities of broker-dealers are highly regulated by federal and state law and the rules of the National Association of Securities Dealers. Anyone acting as a broker-dealer should be licensed.

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