Do not let your Dream ruined by Venture Capital

New Start-ups may not be ready for speedy scaling

Once you get the venture capital for your business, VC partner will assume you to use your raised capital rapidly. The time given by the VC partner to your company 18 to 24 months and the most common perception is that you understand your customer model. It is really not that easy until unless your sales and marketing operations scale up to their double and triple size.

Now consider the case that when you invest heavily in your customer acquisition operation but the sales don’t come as per the expected rate. Your revenue growth from each dollar of investment should be increased to get your job done.

Your VC expect outstanding returns from your business

Your venture partner push the companies hard to give outstanding returns and in failing of this your VC will increase the burn rate and your company will run out of cash and your growth rate will be back over 100 percent.

Things might not work with your investor

According to. Nicole J. Desharnais, your professional investors may underestimate your ability to run the company and most entrepreneurs do not anticipate this and may fail to cope up with the decision VCs made. Your VCs will try to get his investment by selling your company and it will difficult to change his perception when is the right time to sell your company. Your VC should understand the criticality of your business patiently and helpful enough to understand problems efficiently.

You have to adhere your investor’s timeline

The main resources for VC to raise funds are insurance companies, university donations and the limited time span for those funds are 10 years. In general, VCs invest the capital for initial five years and yield their revenues during the second five years of the fund. So there will be a huge pressure from your VCs to return the invested money to the investors.

Risk factor will be associated with your Payout

According to. Nicole Desharnais, VCs always prefer to structure the investment with their preferred favored stocks and that truly in the favor of venture investor. That clearly shows the amount of money goes to the investor before you. The payout will be done to investor and the balance will be shared with you and other stakeholders.

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