Why do start-ups and small businesses need a Venture Capital?

Impact Fundry
3 min readFeb 16


There are numerous examples of companies that have received early stage venture capital funding and subsequently achieved remarkable success. Some prominent examples include Google, Facebook, Airbnb, and Uber. These companies all received funding in their early stages, which helped them to develop their products, expand their businesses, and ultimately achieve significant growth and success.

What is Venture Capital?

Venture Capital can be a lucrative investment for the bold and daring entrepreneur. While it involves significant financial commitment, VC funds offer far more than money as they provide startups with knowledge sharing from technical or managerial experts, unique networking opportunities to rapidly grow their business support network, and invaluable strategic guidance. Moreover venture capital financing is becoming an increasingly attractive option for early stage companies since traditional bank loans are not accessible due to limited operating history in these businesses’ cases.

What are the advantages of venture capital for an early stage (pre-seed) start-up?

  1. Opportunity for the growth: Venture capitalists offer several advantages to startups, with the most apparent being the significant amount of funding that a startup can receive. With a substantial capital injection, a high-growth potential company can expand more rapidly compared to a firm without VC backing, and this can lead to valuable returns for both the entrepreneurs and venture capitalists involved in the collaboration.
  2. Better alternative than traditional financing methods: When a venture capital firm invests in your company, they do so by taking an equity stake, with the intention of helping your business grow, as their ultimate goal is to generate significant returns on an exit within a timeframe of 5–7 years. This means that unlike bank loans or debts, you do not have to make regular monthly payments to the VC firm. Additionally, you do not have to pay interest, which leaves you with more available capital to invest in expanding your business, such as hiring and building a team, expanding your operations internationally, or increasing brand awareness through more intensive marketing or sales activities.
  3. Increased chances of success: Venture capital can be extremely advantageous for your startup if you have a high-risk idea and require support, either financially or in terms of expertise. With a venture capital firm, your plans and operations will be overseen by an experienced team, which increases the likelihood of avoiding significant issues.
  4. Future support: Venture capital firms can provide long-term support for growing your business, as their aim is to exit in 5–7 years. VCs often participate in subsequent investment rounds, providing further support as anchor investors. Additionally, your startup may benefit from a range of different types of support based on the unique set of expertise of the VC providing funding.

What are the advantages of venture capital for a small business?

  1. Access to funding: Venture capital can provide small businesses with the funding they need to grow and expand, which may not be available through traditional financing methods.
  2. Expertise and resources: Venture capitalists often bring valuable expertise and resources to the table, including industry knowledge, business acumen, and a network of contacts.
  3. Flexibility: Unlike traditional bank loans, venture capital investments often offer more flexible repayment terms, which can be beneficial for small businesses with limited cash flow.
  4. Validation: A venture capital investment can serve as a validation of a small business’s potential, which can help attract additional investment and customers.
  5. Partnership: Venture capitalists often take an active role in the businesses they invest in, working closely with the entrepreneurs to help them achieve their goals and grow their companies.

Organisations such as Impact Fundry have the ability to substantially enhance the probability of achieving a flourishing business and expand its potential. This is achievable due to the provision of supplementary support in the form of networks, specialized expertise, and adequate funding, which can catalyze the growth of your business far beyond what could have been achieved without our assistance.

It is crucial to take adequate time to make a well-considered decision, as it can play a pivotal role in determining the success of your business.



Impact Fundry

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