Reliev Ojike
Blessing wants to start a company that would produce and supply adire materials.
She has this idea fully formed in her mind already, she knows the plans and processes to execute in order to make the company a successful one, eventually growing to a very large scale.
The one problem she has is this, for a start, she needs at least one to two million naira. Blessing has only about fifty thousand naira in her account, this wouldn't even be enough to cover the costs of transportation during the course of starting her company.
After much thinking and deliberation, she tells her close friend, Simon about her situation. A very wise decision because Simon has a solution.
He tells her about venture capital. He tells her that through this, she can get adequate funds to start-up in exchange for shares in her company.
Blessing is excited and grateful, she found the answer to her problem!
What is Venture Capital (VC)?
Venture Capital (VC) is a form of private equity funding given to startup companies with significant potential for growth. The funding/capital is given in exchange for equity.
Now, these investors typically participate in management and decision-making in these startups in order to drive growth.
While Blessing has the skill and expertise for this company, she may lack the knowledge in growing the company, the VC has a specialty in guiding new companies like hers. She also has access to their network of partners and experts. In the future, if there's a need to raise more money, she can depend on the VC firm for more aid.
What is a Venture Capital Firm?
This is a type of investment company that manages venture capital funds and makes those funds available to startups.
Blessing has to approach a VC firm to secure the funding she needs to start her company and its operation. She would need to craft and submit a compelling business plan highlighting her company's potential. The firm performs due diligence and if satisfied, loans the money to her.
In return for this funding, the firm takes ownership which is usually less than fifty percent of the start-up company. The VC firm then takes an active interest in ensuring that Blessing's adire company succeeds and becomes profitable. The firm may take an active interest in the production, marketing, distribution, sales, and even other aspects of daily operation.
In Conclusion,
This is a win for Blessing who has been able to solve her capital problem and would get extra benefits of knowledge and connection. And although it's a risk taken by the investor, it may bring huge profits in the end.
Image Credit: Pexel
React, comment, and follow for more informative content.
