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Home Based Business In Canada Article
Not too long ago, every Internet home business used to be funded by venture
capitalists -- until the bubble broke in 1999! Of course, today you can't expect
the venture capitalists to indiscriminately fund your home business as they have
learned bitter lessons!
But still ways exists to get your home business funded. Unlike the olden days,
today you need to have a solid business model for venture capitalists to come
into the picture.
Venture Capitalists and Business Angels.
Venture capital and angel investment seems like an attractive alternative to
personal loans – you’re asking people to invest their money in your business in
exchange for a share of the profits. While it can cost you more in the long run,
it means that you won’t be borrowing money as a loan that needs to be paid back
whether your business makes a profit or not.
Venture Capital.
Venture capital is the big option -- you should only really be looking at it if
your home business concept is technology-focused and would be able to make a
bigger profit if you had access to better hardware. Venture capitalists mainly
look for businesses that have the potential to grow really big really quickly,
but will also want everyone involved to be experienced and confident.
So make sure that you have a perfect plan for your business. Also, the people
who are going to run your home business must be adequately experienced and
qualified enough.
Another thing you must display is bubbling confidence. After all, if you are
not confident enough about your home business ideas who else is! So be
confident.
Approaching a venture capitalist is a lot like approaching a bank to ask for a
loan, except you need to be a lot more convincing. The person you meet will be a
specialist in whatever industry you’re planning to enter, and they’ll run a mile
if you don’t seem one hundred percent sure of everything. Make sure you research
any venture capital company before you meet with them, to see what they look for
and who their existing clients are.
Remember that you’re being scammed if they ever ask you to pay anything, and be
wary of anyone who insists that they won’t sign an NDA (privacy agreement)
before they see your idea – they might be planning to hand it to one of the
companies they’ve already invested in.
Be prepared for competition for venture capital funding to be fierce. Really,
the best way to get it is to build a good version of your business on a small
scale and then wait for them to come to you. Also, you should be aware that
accepting venture capital funding will give the venture capitalists a
significant say in how your company is run. They will try to force you to grow
the company as large as possible, before cashing out somehow, whether it’s a
sale or selling shares. They will, effectively, take over your company and maybe
help you get rich – not too much fun if you’re out to start your own home
business and get away from the typical corporate way of working.
So you need to assess your options before approaching venture capitalists. The
first one being, do you want remain small and enjoy the freedom or big with lot
of tensions.
Angel Investors.
Angel investors are like venture capitalists on a much smaller scale. They are
real people -- individuals who will invest in smaller companies. For home
businesses, angel investors are a much better idea than venture capitalists.
Angels tend to behave more like a business partner. They’ll invest, say, half
the start-up funds, and then take a personal role in the day-to-day running of
the business. This contrasts with venture capital companies, which have a
tendency to be faceless and issue you written demands to be get more profitable.
A business angel brings with them experience and knowledge as well as money, and
they can be a great asset to your business.
Still, you need to remember that they’re in this to make a big profit -- when
you build your business with the help of an angel investor, you need to be able
to show to them how they’re going to be able to get twice as much out of the
business they put in, and how soon. This doesn’t necessarily mean that your
business needs to grow rapidly, but it does mean that whatever you plan to spend
their money on needs to be some kind of tool for making back far more than the
original investment over a relatively short time frame.
So have a profit plan for your home business. These guys are looking for fast
profits riding on your brain and hard work. To please them, your home business
idea and it's return potential must appeal to them.
Staying Independent.
If you are in a small business or home business, the primary motivation of you
is to stay independent! So you need to be careful when share allocations are
distributed and make sure that you retain the control of your home business.
Of course, the best way to stay completely independent is to avoid accepting any
outside investment. If you really need the funding, though, there are still some
ways to take it and stay as independent as you can.
Make sure you keep at least 51% of your business. However many investors you
have, you need to keep hold of 51%, otherwise it’s not your business any more.
Don’t feel like you’re entering some kind of big system where you’re lucky to be
and you have to play by these people’s rules – if you have a genuinely good
business plan, then they’re the ones who should be begging you for the
opportunity to invest for such a good return. If all else fails, you might be
able to persuade your friends and family to invest just as much on far better
terms.
Did you like this article on home business? You are sure to come across more
tips, guidance and articles on home business on this site. Stay for some more
time and browse around!
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