VC and Private Equity | Equity Funding Fund Your Business | Dun & Bradstreet

Venture capital and private equity funding both offer money in exchange for a percentage of ownership in your business. However, there are a few fundamental differences between the two. In this video we explain how each form of funding works and the types of companies they lend to. You’ll also hear from real people who work with both types of funding on a daily basis.

Venture capital firms or vcs work in a similar fashion to angels however they usually only come into play when a company is looking for a larger round of financing in exchange for equity in the business the amount invested can depend on the round for example seed series a series b etc and valuation of the company but can range from thousands to tens of millions

Of dollars vc firms can provide valuable expertise strategic direction and business connections in addition to their initial capital investment vcs often invest in a particular industry that they are knowledgeable about or have previously worked in it is not uncommon for vcs to take a seat on the company’s board to provide direct oversight and ensure the right

Corporate decisions are made it is important for you to understand that vcs have a fiduciary duty to their investors in the fund and they’re always looking for strong returns in fact some may even only invest in businesses with a 1 billion dollar potential bret baris of ia capital group a venture capital funding organization describes what his organization looks

For when deciding whether or not to invest these businesses are growing very rapidly they don’t really qualify for debt financing they’re typically losing money but their top line is growing at 50 to 100 percent a year these businesses are scalable nationwide they’re appealing to us because we can come in and we make we make an equity investment we typically hold

For 3 to 5 years we help them grow help them continue on their trajectory and we provide them resources we help them with oversight we sit on the boards we help them grow their companies and position themselves for for a future liquidity event which which could typically be another another funding round a strategic investor could come in and invest or purchase

Them a venture capital investment isn’t typically the best option for most individual small businesses most vcs nowadays seek high-growth technology media consumer or enterprise driven companies that can create large scalable opportunities with the potential to dominate a particular market but if you are a company with a broad mainstream appeal can create a

Unique and marketable product or service set and have a bankable management team on board then it just might be worth a try daniel todd explains how he successfully grew his business by minimizing risk and building trust with his vcs i closed my first a little bit of chunk of money i really tried to raise as little as i needed to get to my next milestone so when i

Raised the first chunk my milestone was hire co-founder get him up off to speed on the business and determine what it is that you could actually build as soon as i did that then i had enough proof of concept to go raise another $75,000 and that helped me get the product out to market show that i actually had potential partners proved the distribution model proved

The revenue model and then that started to lead to me able to raise quarter million dollars and so all along i’ve been able to kind of take risk out of the business prove the different fundamentals until most recently raised about $400,000 and my hope is of course that now i’ve proven that i can take this too you know tens of millions of dollars a year ideally

Hundreds of millions of dollars in revenue and that i can gain the confidence of vcs don’t confuse venture capital and private equity remember that both are investing in a company in return for equity ownership of your business but there are important differences one way to look at the difference between the two is that vcs typically look to invest in companies

That are early to mid stage in their lifecycle private equity firms are sometimes looking to take equity of more established later stage companies that are on a growth trajectory in which they may be heading towards going public are in need of management turnover or simply in need of a turnaround for example public company that would be suited better as a private

Company like dell computer many of the largest private equity firms focus on businesses that are in distress and in need of significant change or assets that are underutilized they invest in the troubled company if they feel they can turn it around to profitability other firms may have a portfolio of funds that each focus on different types of investments private

Equity firms typically define their investment strategy and holding period through their firm’s investment charter strategy which is a game plan to return shareholder value over a specific time horizon to learn more check out p hub com venturebeat calm and nvc a.org forbes fortune and the wall street journal also have extensive information on the topic

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VC and Private Equity | Equity Funding – Fund Your Business | Dun & Bradstreet By Dun \u0026 Bradstreet – B2B