As a San Francisco Attorney I represent quite a few Start-Ups. Every Start-Up ask the same questions, how do I get investment capital and “Do you know someone who would invest in my company”? The fist step toward investment capital is education. This post is an educational piece to education the Start-Up about capital.
When your big idea with the small budget needs the extra boost to get to the market place, you figured it was time to take the next step. Your business plan: go big or go home. So far it has panned out well, as your wallet is so full you need an accountant to carry it for you, and you want to reinvest those earnings back into the future of your business.
This is Seed Capital, a small but often risky investment from the pockets of company founders’ friends and family. Think of this investment as everything needed to nurture a seed into full bloom (yes, it’s corny—maybe it’s a seed of corn we’re nurturing here). Seed capital covers the gamut of all expenses needed to start your business before you bring in revenue, hence the risk. However, for those willing to take this leap of faith, the payoff can be immense.
Though similar, be careful not to confuse seed capital with Angel Capital, in which investors (often friends or family) provide a capital investment with a targeted goal of company success. This money is more intended to ensure the progress and reaches of your grass-styling enterprise rather than simply an avenue to increase the investor’s profit; it is an investment backing the entrepreneur more so than the company itself (yes, this is most likely the category into which your mother will fall).
So you’ve taken hammer to piggy bank and have seen your former hobby take its first steps as a full-fledged business; your risk paid off, and you’re not the only one who has noticed. Queue the investors, as the growth potential of your business has been deemed worthy of their funds. This Venture Capital is a crucial asset to businesses without access to large capital markets. As a San Francisco Attorney I see this money coincides with the technical know-how and managerial savvy of a group of experienced investors or firms, but this often comes at the expense of your complete freedom in managing your company; because they have a stake, they have a say.
Yes, starting a business is expensive, and yes, the occasional schmoozing required may reminisce the
carefully worded monetary requests from mom and dad that marked adolescence, but money is but a
detail standing between you as a dreamer and you as a successful entrepreneur. So make your mother
proud and fuel the start of accomplishing some career dreams, capitalize on capital, and start a business.
For all the details, A-Z, on your investments, pay a visit to http://www.investopedia.com/
When you have an investor on the hook and it’s time to discuss term sheets, call Eric H. Milliken, a San Francisco Attorney for a free consultation.
What is Venture Capital (VC) by Eric H. Milliken, a San Francisco Attorney