Do venture capitalist firms ever lend money to people just for their idea?
specifically, if someone has a detailed idea for a profitable website (like they have worked out the whole build and functionality of it), would a venture company lend them money? or no matter how much they like it, do venture capitalists ever just invest in ideas??
thanks for the answer jay…so like it is not necessary to have a site built before contacting them? do u think it is better to build a “not-full-potential” site before asking them? or is a killer idea enough? thanks so so much
That’s exactly what they do, although they do also expect to see a business plan. In other words, they aren’t giving money to those that have an idea, but no plans to execute. If they can’t show they have the execution plan, no matter how good the idea, it’s doubtful that the money will flow.
Yes it is possible. That’s what venture capitalists do. Although if only at the idea stage they are more likely called business angels. The problem is that the earlier the stage the bigger chunk of equity they will want. As someone once said dealing with these people is like having oral sex with an alligator!
Venture capitalists seldom (if ever) lend money but invest in a company in return for part ownership.
They don’t lend, they invest and the only time they would consider investing in just an idea would be if that person has a track record of building successful businesses out of such ideas so just an idea is not enough. If you have less of a track record then you’d better have more of your idea developed into a business. Also the less you have to offer them, the more ownership they would want. From the sounds of it, you’re likely to walk in with your idea and walk out with nothing; if the idea is good they might decide to do it with someone they’ve had good experience with and chances are you won’t have any type of copyright, trademark or patent to keep them from doing it without you.
I just want to add to all these good answers that venture capitalists generally like to see that a person has committed some of their own money to the idea. If you plan on making a website you shouldn’t have much trouble raising the money to at least create the website (pretty cheap), even a bare bones one.
As people said earlier, venture capitalists do not lend, they invest equity for a portion of ownership. So realize they expect you to make money fairly quickly.
the better firms will want an equity positon, not a creditor position.