Home Business Financing Part II

You're in the big leagues now.
Generally you're in the ballpark

of millions (of dollars that is) rather
than thousands. Venture capital firms
look for their return on investment
from capital appreciation rather than
interest (unlike banks, for example).

They're generally looking for a return
of 500-1,000% on exit.

It won't surprise you to learn that
venture capitalists are particularly
leery of internet-based businesses
right about now and not without good
cause. It also serves them right. But if

you have a solid business plan and
strong growth potential, this could be
an option for you longer term.

One of the common concerns about
this form of financing, however, is that
you may have to part with an
unacceptable amount of control over
your own business. In return for their
risk, venture capital firms will usually
want some control over how the
business is run and a say in business
decisions. A venture capitalist will
expect a seat on the board, for
example.

It's important to remember, though,
that it's in the venture capitalist's best
interests for your business to
succeed, so giving up some control in
exchange for outside expertise may
well be something worth thinking
about.

To find venture capitalists, get a hold
of "Pratt's Guide to Venture Capital
Sources" for a listing of 1,500 or so
including names, contact details and
areas of interest. Of course, you'll

find no shortage of information online
as well.

For most readers of this article, your
best bet would be to start out by
investigating the various loan
programs offered via the SBA (or your
country's local equivalent). But don't
overlook more obvious, close to home
sources first. For example, if you have

family funds at your disposal and
you're confident that your business

will succeed, better to start out slow
and ease into outside sources of
financing as your business cash flow
can support it. After all, Uncle Jack is
much more likely to be understanding

about the occasional cash flow crunch
than your bank manager. Of course, if
you're NOT confident that your
business will succeed, don't get into
debt with *anyone*, let alone family

members.

Elena Fawkner is editor of A Home-
Based Business Online ...

practical business ideas, opportunities
and solutions for the work-from-home
entrepreneur. http://www.ahbbo.com