What is Venture Capital and Why Should You Use It? Venture capital is a financing option that is invested in small and startup businesses that are considered high risk, but have the potential for high growth. The goal of a venture fund is to invest with a high return, this is usually in the form of acquisition of the start up. Venture capital is a great opportunity for startup businesses that are looking to scale quickly. The investments are large and the startup needs to be ready to take the money and grow their brand. The main benefit of taking advantage of a venture fund is that if you are one of the twenty percent of new businesses which fail within one year, you do not have to repay the money. It is not a loan. Venture capitalists offer businesses with knowledge and experience with excellent connections, which can help startup businesses get off the ground and grow within a short period of time. The problem is that while you don't have to repay the money to the venture fund, the venture capitalist does expect a return on their investment. This means that taking advantage f a venture fund, you should have some exit plan, such as an acquisition. Most venture capitalists want a return in equity in the start up, which means as a business owner you give part of your ownership away. There are times when venture capitalists end up with the majority share in the business, which means as the business owner, you lose control of your business.
A venture fund is operated by a number of partners who raise large sums of money from limited partners, investing on their behalf. The limited partners are often large institutions and the money is used to generate big returns for their investment. The venture capital partners have a seven to ten year window in which to make the investments and generate a return. The aim is to make the biggest return within the shortest period of time. This covers any losses that may be experienced along the line, as investing in startups is a very risky business. Venture funding makes small investments offering large sums of money. This means that a number of the investments are likely to achieve success, covering the shortfall for those few that do not. Each investment means a partner must manage the investment for up to ten years, the venture fund is limited, therefore they are very selective in the deals they do. The most common amount paid out by a venture fund is around $5 million, which is considered a Series A investment. Depending on the size of the business, the venture fund may offer as little as $250,000 or up to $100 million. There are favored industries when it comes to venture funds. Venture capitalists migrate to industries that are more likely to provide a large yield. The most common is technology companies that have a high chance of success. The venture capitalist is more likely to only invest in a few industries, as this is where their expertise and collaborations are the strongest, ensuring a higher yield in the long run.
There are some things to consider when you are looking at venture funding. The first thing to look for is a venture capitalist that will make smart introductions, they rely heavily on trusted connections. It is advisable to contact as many venture funds as possible for your startup to increase your chances of a successful application. Usually you will need to pitch your business to the venture fund. Look for a connection to the venture fund that you can make, do your research, this is not just a basic letter, it's the potential advancement of your new business for the future. About Us: L'ATTITUDE Ventures is a purpose led venture company that invests in early stage US Latino led and owned businesses with large and high growth opportunities. The company started in 2019, addressing the troubling economic costs to our country and the underfunding of US Latino entrepreneurs. The company invests, elevates and accelerates Latino owned businesses by investing early. L'ATTITUDE Ventures invests from $200,000 to $1.5 million in Latino led and owned technology companies that offer or provide technology as core to businesses. Full details on L'ATTITUDE the process and pitch submission form can be found on their information packed website at https://lat.vc/