Venture Capital?

Question:

I run a consulting firm specializing in helping large US and International contractors and construction owners in the construction industry in the areas of pre-construction and project management. The business is generating income but I want to expand the model and develop a utility management tool (software) that reflects my business philosophy and approach. In order to do this I need financing, but I don't want to take a loan, I prefer equity based financing. Any ideas where to start and how to approach this?

Answer:
Unless you deal with "angel investors" (rich folks who like to invest in speculative deals and, as a rule, are passive investors), you will not likely get straight equity financing from anyone for an early-stage venture.

Most VCs, if they're interested, will want to invest via secured debt, which is then convertible into preferred stock. Also attached to the money will be budgets, board seats, and oftentimes management control. Expect VCs to be actively involved in your business, from both a strategic and an operational viewpoint.

The days of straight equity financing for startups is - as a general rule - long gone, so I suggest you tweak your realistic expectations slightly if you are going to deal with professional VCs.

Good luck.

Remember equity financing in a bad year can cost you the firm or cause bankruptcy.Best to get the loan at the lowest possible rate.

Venture Capital?

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