Although many people have the desire to start up their own small business, many do not because of lack of funding. What they may not realize is there are many people in the business world waiting for people just like them. They are looking for people with both passion and a solidified plan, who are without funds to make their dream a reality. People who are already successful will often provide startup capital or venture capital to someone to help them begin their dream of owning and operating their small business.

Venture capital, or VC, is money provided by a person or business to another person or business to help them start their business. It is typically provided to businesses that are in the early stages of growth and have a high potential for growth. The providers of venture capital will often exchange their money for shares in the company. Although they may believe greatly in the company or business, most venture capital investments are not made for entirely altruistic reasons.

The person providing the money, the venture capitalist, expects to have a substantial return on their investment. The person or company that goes looking for VC is often a young company without an established history. They are far too small to raise the money they are looking for through IPO's, stock issuance, or other standard ways larger companies raise cash. Neither are they able to secure a loan from a bank.

Venture capitalists are constantly approached by people with new business ideas. However they will typically reject the large majority of opportunities that are shown to them. Most simply do not have the combination of rare qualities and potential for growth. A good business model and an excellent management team are also important requirements.

Venture capitalists do not make a living by throwing money at every person who approaches them. They evaluate every opportunity critically and those that do not match their unique criteria will be rejected. Several key things need to be in place before a venture capitalist will invest in a business. A solid business strategy is one of the first keys to securing VC.

Without it, most people will be rejected before their first meeting. Succession planning is also quite important to a venture capitalist. Pumping money into a business without a backup person who knows how to run the company is a bad idea at best. Finally, a group who has a mentor on their team will greatly increase their chances at securing VC.

Although a new company may have a great idea, their lack of experience can be the single greatest inhibiting factor in their pursuit of VC. Finding a mentor with established and successful business experience who will help guide them will greatly increase their chances of securing VC. It will practically ensure the future success of their business. Mentors are also valuable for helping to determine a real value for the business so that one doesn't ask for too much, or worse, too little when the time comes.

Venture capital comes from a variety of sources. They make their living by providing both capital as well as marketing, small business consultants, and in some cases, mentors. Family and friends are a tried and true source of venture capital. Turning to them can be a last resort because things can get messy, especially if the business fails.

The oft-searched for but not often found angel investor, or someone who can provide the seed money is an option too. They will determine whether a new idea is viable or not, however finding such an investor can be next to impossible. While nothing can ever be certain, making sure a budding small business has a solid business plan is a very basic requirement. A good marketing plan, potential for growth, and realistic expectations are good steps in the path to securing venture capital.