If you are running a business start-up in Singapore and are looking for additional finance for your business, you may have heard about venture capital.
Venture Capital is a term often thrown around when it comes to entrepreneurs and new businesses. Most start-ups will need some sort of business funding (also known as Equity Financing) in order to grow. However very few if any new businesses will be able to secure a loan from a traditional bank or financial institution. As a result, venture capital is one potential option; one that works as an opportunity for investors as well, as they will often get a strong percentage of what the company makes, should things progress as planned.
How Venture Capital Works
When investors view an entrepreneur's idea or company that they think might succeed, they will offer to make a venture capital investment in exchange for a high percentage return. In some cases, the investors will also want to play a key role in the decision-making process. For entrepreneurs in Singapore this can be beneficial since they will be able to leverage the experience of the venture capital investor. For example, an entrepreneur may have a good business idea and want to take it overseas to China, the rest of Asia or worldwide, but have little to no experience with exporting to these alternate markets. Having an investor on-board with this kind of experience can provide valuable insight and help form a successful strategy from the get-go.
The main types of Venture Capital come either via a "Venture Capitalist", which is a high net worth individual or private company investment, or via what is known as a "Venture Capital Fund", also known as a Limited Partnership, which pools together funds from various parties. This kind of partnership is quite common in Singapore. You will find investment groups and clubs looking for sound investment opportunities.
How to get Venture Capital in Singapore
For your business to obtain venture capital investment, you will need an idea or concept that will grab the investors' attention and get them interested. Beyond just an entrepreneurial idea, they will want to see that the ideas and growth plans are realistic. They will want to know how much time it will take to achieve such goals and may even take into account your business acumen and overall demeanour.
One of the common mistakes that entrepreneurs make when seeking venture capital is relying too much on their ideas. Investors will want to see strategies devised to back up this plan, and as a result, entrepreneurs in Singapore should seek advice from both legal and financial advisors, as well as making sure that their team has some experience when making this pitch.
How to find Potential Investors?
The Angel Investment Network has a range of investors who are active across a wide range of industry sectors and are looking to make this sort of investment in your business ideas.
Signing up with the Angel Investment Network is one way. We have a database of entrepreneurs, along with angel investors that are looking to make investments both in Singapore and abroad. After signing up, you can place your ideas online and connect with investors that will help get things rolling.