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The Entrepreneur’s Journey: The Capital Constraint and Venture Capitalists

Writer: Peter OtaborPeter Otabor


Capital! This is the entrepreneurs biggest challenge; where to get the funding to fuel the idea and to support the business. This may be the only obstacle entrepreneurs truly face as they trail the capital constraint puzzle trying to figure out ways of surviving the crisis. Soon, the pressure hits hard and puts a weight on passion and thus ideas become risky and failing ventures which eventually crumble. Solving the capital constraint puzzle is thus the entrepreneurs’ foremost target and this is where the journey starts.

Entrepreneurs form the life force of any economy on the path of growth; they are the force driving innovation and change and when aggregated together employ a large part of the nation’s work force. Given their paramount importance, governments often pledge funds towards supporting their ventures with the hope that they grow and become major players supporting the economy. But with the increasing rate of start ups more sources need to emerge to augment the already existing opportunities but governments’ wont pledge more funds as they focus on curtailing budget spending amidst worsening economic crisis. The responsibility thus falls on the private sector; private initiatives supporting the growing trend of idea and innovation.

The rise of venture capitalists (VCs). VC’s are value investors who provide funding to start-ups and also support small businesses that wish to expand but do not have the means. They are the new face of private partnership in supporting entrepreneurs especially in developing countries. These investors invest in viable businesses that show good growth and earning potential and support them with their wealth of experience and expertise in return for earnings on their investments. They understand the challenges entrepreneurs face and as such their key objective is to aid the entrepreneur in growing and becoming profitable. With VCs, entrepreneurs are tapping into a large pool of capital which offers access to guidance, exposure, a support structure and much more.

Entrepreneurs have a responsibility and a role to play. Capital won’t fall from the heavens so efforts need to be channelled in pursuit and VCs are a good source. Entrepreneurs must have good structures and build competencies as venture capitalists often look out for characteristics such as a strong management team, a viable market and a unique offering with a strong competitive advantage. So entrepreneurs must invest not just in their products but in capacity and team building.

Business plans are important but more importantly is the art of delivery when the opportunity arises to pitch your idea. No one wants to hear your stories but simply what you have to offer; learn the art of presentation. You are a business man not just an entrepreneur, act like one. Never appeal to emotions or sentiments but only to self-interest. Remember everyone is out to make money so you need to show convincingly how your idea can make money. If you need money don’t just tell me how bad you need it, tell me how you can use it to make more money and if am convinced you will get the money.

 
 
 

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