Venture capital groups have become one of the most popular methods of gaining equity. This method has become so popular of late that Irish Venture Capital Companies have become one of the primary sources of funding for SME’s.
The purpose of venture capital groups is to provide equity to growing start-ups. These groups may also act as a mentor of investment as they often provide essential advice to the companies in whom they invest as well as assisting in the expansion of the company.
It was reported in February of this year that Venture Capital Funding for SME’s had hit the 400m mark. This is the highest level of venture capital funding seen in over 10 years. Over 80% of this money was dedicated to the expansion of existing companies. This growth in the popularity of venture capital funding has lead to growing confidence among Irish entrepreneurs.
Obtaining venture capital is very different from raising debt or a loan from a lender such as a bank and is an option that should be considered carefully. One of the ways in which this method of funding is unique is that instead of seeking security on their investment, lenders of venture capital will usually charge interest on the loan. Another way in which this option is different is that venture capital is invested in exchange for a stake in your company; creating a symbiotic relationship between the investor and the company they are investing in. The investor’s return is dependent on the profitability and growth of our business.
Recent research has shown that Venture Capital backed companies grow faster than other companies. Research has also shown that these companies are more profitable than their peers at a similar level. As well as injecting cash into the business, the investment is also likely to inject the start-up with credibility
So, is Venture Capital a viable option for your company?
Venture Capital is the best option for you if you are hoping to rapidly grow your company, and have the ability to protect your intellectual property throughout the investment period. In order to appeal to venture capital investors it also helps to have a USP (Unique Selling Point).
If you decide that Venture Capital Funding might be for you, you must ensure that your investor has a strong track record, excellent credentials, industry contacts that can help you grow your business and the time to invest in growing your company.
There are a wealth of venture capital funds available in Ireland at your disposal. For your convenience we have compiled a short list of those available:
- AIB Seed Capital Fund
- AIB Start-Up Accelerator Fund
- Bank of Ireland Early Stage Equity Fund
- Bank of Ireland Start-up and Emerging Sectors Equity Fund
- SOS Ventures Ireland Fund
- Frontline Ventures Fund
- Delta Partners
- Enterprise Equity
It is vital to choose the correct investor for your business, as your investors will be some of your most important contacts. Your venture capital provider should be able to provide advice and guidance as well as capital and it should be a relationship that will grow alongside your company.