As the owner of a growing startup, you may be considering some options to secure capital to help fund that growth. If you have been thinking about seeking out venture capital investors, there are some things that you should consider. Before you make a financial decision that will significantly affect the future of your growing business, here are some things you should know and discuss with a business law attorney like Jeannie M. Urbani, MBA, JD Attorney at Law about venture capital investments.

Venture Capital Investment Often Means A Lot Of Money

In many cases, venture capital investors are looking to put a lot of money into a venture that they believe is going to be successful. This means your company is going to see a serious influx of money in a fairly short time. You should talk with your business attorney about the legal side of accounting for this money and what you need to do to document what you're spending those funds on. It's easy to get caught up in the nuts and bolts of your daily operations and lose track of where those funds are going, so make sure your legal rights are protected and you're doing what you're contractually bound to do.

Venture Capital Investors Should Sign An Investment Contract

Before you accept investment money from any venture capital firm or individual, you should have an investment contract drawn up by your business attorney. He or she, working on your behalf, will create an investment contract that protects your interests in the business while clearly defining what your investors are entitled to as part of this agreement. That way, there are no questions or grey areas after the fact in which you might find yourself pushed into an IPO or, potentially, forced out of your own company.

One Venture Capital Investment May Turn Into Multiple Investments

Most venture capital investors have a network they frequently communicate with. In that network are many other investors looking for similar companies to work with. As a result, in an effort to protect their investment and help your company grow, your first investor may introduce you to others who may be willing to contribute as well. This can put you in a better position to expand your business beyond what you had initially expected.

Before you make the decision to start seeking venture capital investments, make sure you have the legal documentation ready to protect your business and your financial interests. Your business attorney can help you with this process.