What is a Venture Capitalist: Many Enterprises need to adjust their thinking as to how a Venture Capitalist operates and become involved. Essentially they are high risk calculated Bankers in a very specialized corporate sector, the Enterprise or the Businessman is on the road to 'Capitalize a Venture' to make money, the Banker wants a 'Venture to Capitalize' to make money, both have the same goal, but achieve it in two very different ways. 

The Businessman 'creates' a product to sell for a profit and then may sell his portion of the core business, thus the venture was fruitful. 
The Venture Capitalist 'creates' a fertile enviroment from a juevenile or semi-matured enterprise so that it becomes "Investor Attractive" in order to capitalize the enterprise and make a profit. 
The fact is most unlisted companies are far from "Investor Attractive" and need either cosmetic or major surgery by a Banker to bring them to the stage where serious investment capital can flow into the Enterprise. 

Types of Veunture Capitalists: Not all Venture Capitalist provide the same level of service, just the same as some Banks are Retail, others are Guaranteeing Banks, or Trading Banks, some are Collateral Providers or Discounting Bankers, then again others are just simply Trustee or Custodians. 
This rationale applies to Venture Capitalist and Merchant Bankers, for example, some Venture Capitalist prefer to only deal with Technology type stocks, others prefer expanding Companies ready for a public listing, some will issue credit, others only sponsor on 2nd ranking securities. Most lend only if they know the capital is not exposed to 'undue risk'. The Venture Capitalist often needs to have a position in the company on an equitable basis to make a profit. 
There are a few Venture Capitalist who will support and sponsor Enterprises by writing conditional credits to conduct settlements between the contracting parties, often the credit is then cleared through a syndication. Credits can be bills, notes, guarantees, comfort letters, undertakings,assurances, term bills of exchange, deferred settlements. 

Credit Enhancement: For any enterprise to obtain a credit or raise equity they need to satisfy the Venture Capitalist that the Enterprise has; 

a) Capacity b) Substance c) Marketability d) Business Acumen  
c) an Exit Mechanism e) Serviceability f) Creditworthiness. 

Other Assistance: Since most Enterprises require corporate massaging to become 'Investor Attractive', eventually its up to the Financial Gurus to set the format, as they are best to judge where in the Capital Market the securities are ultimately to be pitched.  

Generally a complete corporate overhaul is required, such as;  

• Share re-classification into different classes to suit investor demands.
• Increasing Founders share issue to counter balance dilution factors.
• Internal debt adjustments to clean up the Enterprises Balance Sheet.
• Setting up subsidiaries so the Parent company is 'bankruptcy remote'.
• Converting debt to equity or equity to debt.
• Securing the assets of the company such as copyrights, patents, brand names.
• Recommending Laywers for specific tasks for fast track documentation.
• Separating Directors personal exposures away from the core business.
• Promoting and negotiating Supplier/Distribution contracts.

Costs: Obviously a Venture Capitalist works more closely with an Enterprise than anyone else, more so than a Lawyer, Accountant, Bank manager, therefore a lot of their expertise will be reflected in the fees charged, which is also taken or secured by shares or securities in the Enterprise. Very few Venture Capitalists will look at unlisted deals for less than a 10% stake and often much higher, plus interest on the debt or credit. Statistics indicate that Enterprises need to allocate approx 5-8% of the gross capital required to cover costs (although some costs are debited from the capital at settlement). 

Facts & Myths:  1.Venture Capitalist don't want to run your business, they have more profitable ways to make money.  2. Venture Capitalist don't want to dominate your business, since this may cause Investor shyness.  3. Venture Capitalists don't want to be locked into your Enterprise for a long term, a quick turn around is usually the preference  4. Venture Capitalist avoid Enterprises that are argumentive or prone to litigation, since its a drain on mental resources.  5. Venture Capitalists do not lend risk capital as speculators or risk takers do.  6.Venture Capitalists rely on security of assets, cashflow, refinancing, securities downloading, bills conversion or other known and calculated assurances. 7. Venture Capitalists don't want just simple interest or line fees, high yields is what stimulates them, hence the same as investors. 8. Simple interest offered at current Bank rates  probably will not raise enough for a cup of coffee. 

Enterprises need to extend their own attitude and desire to make 100 to 300% margin or more as acceptable on product sales, to how the Capital Industry views it when all the Enterprise wants to offer is 'chook pellets' of interest to Investors for the use of their capital to grow their business 2 to 3 times or 10 fold. Likewise a Venture Capitalist can make a big difference to gear up your business with their talents, expertise and credit, but, it comes at a price.