4 Dynamic Impact of Venture Capital on Startups

Dynamic Impact of Venture Capitalist on Financial Capital of Start-Ups

Venture Capital (VC) is one of the way to finance the initial part of a business in return for equity. The venture capital companies invest in variate of ideas but mostly in technology because after the company becomes establish and when the big value is created the venture capitalists will have exit plan through Initial Public Offering (IPO) or trade sale. Usually the venture capital companies help to invest for up to 6 years and then list it on financial market for IPO to have large capital gain to pay of the shareholder with return.  The venture capitalist have been the backbones of many great companies but there are also problems regarding the equity when the VC wants to exit. 

• Who needs Venture Capital? 

The entrepreneurs with great ideas usually needs venture capital, because their ideas are uncertain and it is hard for them to get large amount of loans from the banks. The venture capitalist understand how the financial market and business works and they know how to make the ideas come to life and make the company established. 

Dynamic Impact of Venture Capitalist on Human Resources of Start-Ups

Start-ups tends to grow fast and becomes large establish company with complex issues, that requires talented employees. The human resources becomes one of the issues of start-up companies, the technological start-up companies requires specific skilled employees. The venture capital companies are experienced in providing support with human capital to the start-up. The VCs will not only provide but they will also provide support with human capital. 

Dynamic Impact of Venture Capitalist on Sales and Marketing of Start-Ups

The start-up companies needs to reach curtain goal in terms of sales before it can be considered as established company to be listed as public in Financial Market. The entrepreneurs with ideas might only have technological background and they might not have the skills with marketing and sales, which is why it is essential that they have skilled manager to achieve the targeted goals.  The Venture Capitalist provides support in terms of appointing Managers with great skills in sales and marketing. The managers with essential marketing skills that has critical, analytical and outside the box thinking to achieve the targeted goals of stat up company.  The venture capitalist support with sales and marketing to achieve the goals faster to make their gains from the company when it is time to exit with IPO or Trade Sales.   

Dynamic impact of Venture Capitalist on Internal Organization of Start-ups

As the start up company grows it becomes complex and it requires organizational planning, the company needs to start putting all the things together in organized ways by creating departments and allocating the manpower accordingly. The company needs to make plans in terms of allocating departments for production, sale and marketing, Research and Development, human research department and board of directors. The entrepreneurs with the initial idea might not be the CEO of the company even that he owns up to half of the company's equity. There are some cases where the entrepreneurs might not be able to adopt to the CEO position to manage complex and establish company to add value. The venture capitalist and entrepreneurs might come to an agreement to appoint the CEO to add value to the company. Some people are just born to be a leader.