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"VC" funding

“VC” or “venture capital” funding involves raising funding from businesses whose primary role it is to find and lend to up and coming businesses.

They will employ more sophisticated lawyers who will review your business (i.e. conduct “due diligence”) and then prepare an agreement (the “Investment agreement” or a “shareholders’ agreement”) which will set out the basis upon which they will invest into your company and detail their rights and your various obligations to them.

VC funders would probably begin lending at the £400,000 level and could extend to loans up to the £2,000,000 level but may in some circumstances go higher, depending upon how much they like the business or not.

You can find VC funders on the internet and many will allow you to submit your business plan via the internet so that they can consider.

They will generally take a minority equity stake in your business (i.e. less than 50.1%) leaving you control of the business but, again, as an early stage investor, they will manage the risk profile of their investment by seeking a number of potential controls over your business so that, if things start going wrong, they may have certain step in rights which will enable them to step in and take control of the business and take steps to get repaid (i.e. sell the business or sack you and bring in new management).

For more information about Olswang go to http://www.olswang.com/main.asp?sid=193

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