Nearly as important as how to structure venture capital deals is determining when you should seek the venture capital to begin with. There are several schools of thought between trying to scale the production of the idea, versus fine-tuning the business product and model.

For a new tech application that ‘s riding the current media coattails, the rush to market takes on greater urgency, which also requires significant upfront capital to get it through all the R&D, platform testing and malware concerns.  This process arms the investors with significant leverage in the valuations, term sheets, stock options, interest rates, funding and cost oversight, and more.

For alternative businesses, it may be more important to fine-tune all aspects of the product and the business model, and then start to develop the business before talking to venture capitalists.  A proven and healthy business model will change the leverage from the venture capitalist investor to the entrepreneur – the funds may expedite growth and revenue, but it’s not vital. And getting bigger isn’t always better for a number of reasons…which is the topic of the next blog!