Doron F. Eghbali Business Planning Law Blog on Lawyers.com

1. INVESTMENT IN MULTIMILLION - DOLLAR COMPANIES

Venture capitalists usually eschew high-risk investments. Start-up companies do not usually have a proven track record of yielding returns or even success. Especially, in the aftermath of the financial meltdown and the subsequent persistent credit freeze, venture capitalists have grown very selective in their investments. In fact, according to MoneyTree Report by PriceWaterHouseCoopers and the National Venture Capital Association, venture capitalist investment in 2008 declined markedly since 2003 for the first time. In addition, venture capital investment was still low in the first quarter of 2010. Thus, venture capitalists intelligently peruse start-up companies business models for signs of trouble or uncertainty.

2. INVESTMENT IN THE BUSINESS MANAGEMENT

Venture capitalists understand with the best business model and brightest outlook, a company could bleed money and they might lose their investment quickly. Hence, venture capitalists often become very involved in business management of the companies in which they invest. They exert control in board rooms and even to some extent day-to-day operations.

• A. Not Every Entrepreneur Could Live with Outside Control: You should certainly gauge your own managerial psyche and carefully ascertain if you could live with outside micromanagement of your company. The counterargument could be since you no longer need to think about raising money and worrying paying your employees at the end of the month, you will have more time and success thriving your business. Nonetheless, you should prudently gauge the pros and costs and decide accordingly.
• B. Venture Capital Business Objectives Might Be Different From Yours: Venture capitalists' micromanagement of their investment could be further compounded by rather divergent business outlooks. Venture capitalists ultimately and relatively swiftly long to take the company public and make profits. However, the management might see more growth and trenchantly argue for more time before going public.

3. INVESTMENT IN RELATIVELY LIKE-MINDED ENTREPRENEURS

Venture capitalists research you and seek to ascertain if you can work with them. Likewise, it behooves you to understand the people you are investing with. You should realize if they have integrity and caliber to bring you peace of mind and cultivate with you long-term business relationships. Nonetheless, at the end, you could assuage your concerns by constantly reminding yourself, the color of money is green and my objective is to lawfully and intelligently grow my business even if I have to sacrifice some of my longings and ideals.

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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. He Primarily Practices Business, Real Estate and Entertainment Law. Doron Can Be Reached at: 310-651-3065. For More Information, Please, Visit: HERE.