Professional Business Plan Specialists

Venture Capital Ins and Outs: 7 Things Entrepreneurs Should Know

Reach new heights

News And Articles

Venture Capital Ins and Outs: 7 Things Entrepreneurs Should Remember

Venture Capital Ins and Outs: 7 Things Entrepreneurs Should Remember

Table of Contents


Venture capital is one of many ways entrepreneurs can obtain funding for their business ideas; among one of the most popular, in fact. Venture capitalists can be found anywhere, especially in the fastest-growing cities for entrepreneurs today.

How does venture capital work? What do you need to know before seeking funding?

Here are 7 Things Entrepreneurs need to keep in mind when considering Venture Capital funding:

  1. Angel Investments versus Venture Capital: Angel investments are, in a lot of cases, the first money a start-up raises.  When you raise a seed, or a Series A round, instead of raising it from venture capitalists or institutional sources of capital, you often raise it from individuals.  There are two categories of individuals. There are the people you know, like friends, your grandmother, and brother in law’s next door neighbour. That category is called friends, families, and fools.  That is often lumped into the same category of angel investors. They are people who like to make early-stage investments in young companies.  They typically take somewhere between a very passive role in the company where they give a few ten thousand Rand.  Or they might take an active role where they sit on the board and be an advisor, typically with the financing of a few hundred thousand Rand to well over a million Rand.  Once you start raising bigger amounts of money than that, you typically need to go to a traditional institutional source of financing, in which venture capital is a natural one.  Not the only one, but a natural one. 
  2. Solve an Industry Problem: Venture Capital is what most entrepreneurs think they need when they start a business. However, the core of what they really need is a killer product (or service), calculated distribution, timing, great customer service, and capital (preferably from customers over outside sources). The most important thing an entrepreneur can do is solve a big problem in an industry. Everything else will happen automatically.
  3. Use Data to Stay Ahead of Your Competition: Entrepreneurs should ensure they constantly monitor their key performance indicators, which will prevent them from falling behind the competition. It is important to recognise the metrics that actually apply to the matter at hand; data for the sake of having data is a pointless endeavour.  Having a bulletproof business plan and a simple yet effective pitch deck will help them communicate clearly with investors. Investors need to see that the founders believe in their startup and that they have a mission/vision that they are passionate about achieving. Above all else, you have to show investors why you are a smart investment, how you, as an entrepreneur, create value, and what separates you from the rest of the pack.
  4. Perfect Your Pitch: Venture capital typically works the same everywhere: investors see potential in a startup or small business and finance them. Small cities with universities have the potential to see large growth in technology and small business, which makes it an appealing location for venture capitalists to seek opportunities. For entrepreneurs looking to secure funding, make sure you have a solid pitch with a plan for the future. Investors want to know what’s in it for them, so give them a reason to invest in you. 
  5. Work Fast: One thing that entrepreneurs should know is that venture capital investors are drawn to speed. The fastest company in any market will win and it will be a decisive victory at that. Speed is an asset and if technologies employ it wisely, then those startups will be a magnet for capital.
  6. Know Your Business: Venture capital is one of the fastest-growing methods of funding for cities as they expand. For small businesses or startups, it is important that they are organised and prepared to answer questions. They need to know their business plan, their product or service, solutions to potential problems, and a reason why they will be successful in their local area.
  7. Technology is a Popular Startup: Seeking funding and pitching your company is an exciting and nerve-wracking time! If your company creates software, technology is becoming an increasingly popular area for startups and has a growing number of investors that are interested in the sector. When you’re first starting out, network and attend as many events as you can, share information about what you do, and ask for introductions to investors you’d like to meet. You never know when you’ll meet the right person!

Read More: Starting Your Own Business and 3 Agonising Emotional Costs

affordable business planbest business planbusiness plan assistancebusiness plan consultantbusiness plan consultantsbusiness plan creatorsbusiness plan pricesbusiness plan servicebusiness plan writerbusiness plan writersbusiness plan writingbusiness plan writing companybusiness planning companiesprofessional business planventure capital

Established in 2006, we have successfully written more than 12,500 Professional Business Plans for clients across 25 countries. As South Africa’s Leading Business Plan Company, we are confident that we would be able to assist you too. Kindly note that we also offer “Investor Pitch Decks”, “Excel-based Financial Models”, and “Proposal/Tender Writing Services” in addition to our Custom Business Plan Writing Service. Please visit our Services page for more information.

We look forward to being of service to you. Please feel free to contact our Founder, Dr Thommie Burger, on +27 79 300 8984 should you have any questions. He is also available via email and LinkedIn.

JTB – Your Business Planning Partner.

Share this article…

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp

Recent Articles

Business Plan

The Business Plan and 4 Superb Philosophies when Writing One

Creating a new business is a process fraught with difficulty and failure and many businesses fail in the first twelve months of trading.
Most businesses operate in competitive markets: They have to compete against and out manoeuvre competitors in order to answer the question of how they will gain market share and establish a competitive advantage. Not all organisations arrive at the same answer and for good reason.


Buying a Business vs. Startups: 12 Possible Reasons Why One is Better

Before I start off, let me be upfront by saying, 99% of would-be entrepreneurs out there do not have the funds to buy an existing business. But, in an ideal world, if you do have the funding available, it would be worthwhile to look at the reasons why buying a business is an easier path to becoming your own boss than starting from scratch. So why should you buy a business versus start your own?

Investor Questions

Investor Questions – 10 Critical Questions You Will Be Asked When You Seek Funding

Investor questions are dreadful to new startups. Entrepreneurs need to be prepared when pitching their start-up companies to investors by anticipating the questions they will receive. Presenting to potential investors will involve as little as 10 questions and as much as 100 questions. We have focused on the Top 10 Most Common and Most Difficult Questions that entrepreneurs can expect when presenting their Business Plan.

Startup funding

Startup Funding and 8 Costly Mistakes to Avoid

Startup funding is perhaps the greatest challenge to new companies. Startup companies are faced with many challenges, and one of these are securing funding. Securing and managing funding can be one of the most exciting – and nerve-wracking – parts of being an entrepreneur.

Subscribe to our newsletter.

Stay informed and opt-in for our newsletter via email. We respect your privacy and we never spam.