Randall Castillo Ortega of RACO Investment explains using a venture capitalist to invest in a business

Finding investments for your business or startup is a complicated task. You can try financing through banking institutions or angel investors, but each method has its own peculiarities. One alternative, increasingly sought by entrepreneurs, is venture capitalist, an investor capable of injecting venture capital into a company. Randall Castillo Ortega, a financial expert and founder of RACO Investment, breaks down venture capitalists and how they can be used to invest in businesses.

This type of investment is used to finance mature ventures. Because it is high-risk capital, it also tends to demand high return rates for its investors. Says Castillo, “In most cases, the venture capitalist invests securities about 25% of its spin capital, and the waiting time per return can vary from one to five years. Larger investments, for bringing more risks, require in return the participation in the management of the company to compensate for any damages.”

The venture capitalist can also provide management advice, as he or she is often a specialist with a lot of experience in the business world. In addition, they can provide optimal networking and, depending on the growth of the company, can help in the creation of a stock exchange IPO. However, that is not recommended, unless the growth presents numbers well above average.

Before looking for a venture capitalist capable of making investments in your business, you should check if your company is ready to receive them, as these investors need to be sure that the risks are very few, since the invested capital is usually high.

Since the goal is to finance the expansion of your company, you need to have consistent results obtained before looking for this type of investment. Minimize risks, show you’re safe and know the market. It guarantees investors that your business can grow even more with these financial aids.

A good pitch must be able to convince many investors, even if initially they seem suspicious. Explains Castillo, “This is an important stage: create a qualified pitch, which shows your vision of the market and tells the story of the company. At the same time, it is important that you be able to present it in a few minutes.”

When talking to the potential venture capitalist, be clear in setting out your goals. What do you need the money for? How will it be invested? What is a good business for the investor? Answering these questions correctly can make the difference between getting investor approval or not.

Before getting started, you need to find the most suitable financing model for your business. Knowing the wide range of investment options will allow the entrepreneur to get an injection of capital more easily.

Some of the proposals to make you known and arouse interest in investors are to enter competitions for entrepreneurs, networking to attract business angels and venture capitalists, or using digital platforms. Adds Castillo, “Don’t forget that innovation must be constant if you want your project to thrive in the complicated labor market. If your bet is innovative and necessary in society it will allow you to arouse the interest of investors and attract the capital necessary to develop the project.”

To make yourself known, it is important to be present both in traditional ways and on social networks, which will help your company position and create a good brand image. You will be able to offer potential investors through a good advertising and marketing campaign a more detailed knowledge of your project and how it works.

Keep in mind that this way, you will also reach potential customers; therefore, the benefit of getting involved in a good communication campaign can be much higher than the economic and time expense you make in making it.

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