What is Venture Capitalism and How Can it Help Your Business?

It’s the beginning of Startup Fest Europe, and right now the Netherlands is the centre of the start-up world. With new and experienced entrepreneurs all coming together for this event to join forces, learn, exchange and network – it is also a week when the world’s biggest names in venture capitalism will convene.

There’s a lot written about venture capitalism and start-ups but maybe you don’t know much about what this entails. Well, here’s the venture capitalism for dummies blog you’ve been looking for.

When do you need to talk a venture capitalist?

When you start a business, you’ll need money for your workspace, employees, supplies or marketing. You can go to a bank for a loan, tap into your own savings or set-up a crowdfunding tool.  If you’re business is growing rapidly and you need to scale up, you’ll probably need more and bigger funds. This is the time to start talking to a venture capitalist.

What is a venture capitalist?

It is often thought that venture capitalists only invest in “those dotcoms” but this is not the case. They will invest in any company that has is great idea or product and is ready to scale up.  They will invest by creating a fund for you which is basically a pool of money from wealthy investors and other companies. The venture capitalist firm raises a fixed amount in the fund. The VC firm will then invest this amount of the fund in several companies. Each firm and fund has an investment profile; this profile is linked to the type of business (here you’ll find that dotcoms are very popular to invest in).  The profile that the fund chooses has certain risks and rewards that the investors are been made aware of beforehand.

What does the venture capitalist do for my business growth?

Once the firm reaches its goal for the fund, the seed money, will go into the company. The company in return releases stock and decision power to the investors. The investors can, for example, get a seat in the board and will have to approve certain spendings or hirings of new staff.

So how can I get in contact with venture capitalists?

If you have a company that is ready for the next step but needs the funds to make this happen, go to VentureClass in Groningen during StartUp Fest. StartUp Fest is the week where all the biggest venture capitalist firms of the world will come to the Netherlands. Don’t miss out the opportunity to rub shoulders with these “fundraisers”, so sign up for any of the cool events and work your magic.