What Is a Venture Capitalist?

by Lois Leonard

1 min read

Venture capitalists are wealthy people who invest their own money in startups that haven’t yet established themselves. New businesses have a tough time selling traditional banks on their ideas. Banks want to know how much money a business makes and its creditworthiness to lend money, and startups typically have neither. When new startups need funding, they turn to venture capitalists, who lend them money in exchange for a stake in the company. Being a venture capitalist can be risky business. After all, these are the people who can see the benefit in investing in companies that make cool apps that consumers might like – or those with innovative business ideas that are so new that no one knows whether they’ll take off or not. Venture capitalists get their money back, plus some profit, when a startup merges with an established company or goes public. If you think your startup might need venture capital funding, the Canadian Venture Capital and Private Equity Association has an online membership directory you can browse. You can also find venture capitalists who fund businesses within specific provinces online. Venture capitalists each have their own criteria in terms of what they’re looking for in startups. Since their ultimate goal is to make money, you need to show them a strong business plan that tells them exactly how much money your startup plans to make and how fast.

References & Resources

Related Articles

What Do Venture Capitalists Want to See Before Investing?

When your business needs capital to get off the ground or continue…

Read more

3 Tips for Pitching Your Business Idea to Venture Capitalists

Many new small businesses get started by a person with a new…

Read more

Reaping Big Benefits With Small Business Joint Ventures

If you want to mix up what you do, expand the scope…

Read more