Are you of the opinion that venture capital financing is no different than a commercial loan from a bank? Well, there is no denying that you will have money in your bank for your business by the time both transactions are concluded.
However, there is a huge difference in contacting a venture capital provider for an investment as compared to a bank for a commercial loan. For starters, the bank is simply trying to earn interest on the investment. It has absolutely no concern with what you do for your business and how you run it.
As long as you are making the repayments on time, the bank will have absolutely no role to play in your day to day operations. If you borrow $100,000 a bank and are promised regular funding by a friend or family member, you can use the money received from the family member to repay the bank loan without doing any business whatsoever.
This may seem like an extreme example but the point here is that banks have absolutely no interest in the viability and long term profitability of your business. On the other hand, the venture capitalist is not interested in earning a fixed return every year. Rather, the venture capitalist is interested in identifying the next big thing and earning handsomely in the long run.
There have been innumerable instances where great technological solutions have relied on initial investment from venture capital providers who are prepared to trust the vision. Facebook received funding from the founder of Paypal.
Today, not only does the investor enjoy good returns on the money invested, he also enjoys great goodwill because he is known as the person who believed in Facebook before anybody else did. Hence, you will have to offer something more than just regular repayment of the money when you are contacting a venture capital provider.