If you're seeking venture capital (VC) to help launch or accelerate a business, first understand a little about who venture capitalists are – and are not. There are many widespread misconceptions. Venture capital is money put up by professional venture capital firms that invest alongside management in young, rapidly growing companies that have the potential to develop into major economic contributors, says the National Venture Capital Association (NVCA).

Many people think of venture capital investors as wealthy financiers looking to fund small business startups, but that's more a description of angel investors. In reality, professionally managed venture capital firms are usually private partnerships or closely-held corporations with an available pool of money that comes from pension and endowment funds, foundations, corporations, wealthy individuals, foreign investors and the venture capitalists themselves. Venture capital investors are highly demanding – typically seeking a big payback (like 10 fold or more) within five to seven years. They may sift hundreds of opportunities to find one they like. Here are some things to know as you seek small business finance via the venture capital route:

1. Venture capital investors finance new and rapidly-growing companies
2. Some venture capital companies will consider startups; others want only young but established businesses
3. Venture capital investors take an equity ownership stake in the business
4. Venture capital investors often seek active management participation and may help develop products and services
5. Venture capital investors take high risks with the expectation of high rewards

Business.com's "What Works for Business" blog is a great way to keep up with the latest financing solutions, trends and strategies for small and medium business, and startups.

Action Steps
The best contacts and resources to help you get it done

Find firms that look like a good fit with your opportunity

The National Venture Capital Association is a membership group of venture capital firms and venture capital funds, and has a venture capital directory.

I recommend: The NVCA membership list is a free online venture capital directory, complete with links to many individual venture capital firm websites where you can discover what types of investments they are interested in, their submission guidelines and perhaps examples of companies they have backed. There's also a detailed overview of how venture capital funding works.

Discover a typical venture capital firm's investment criteria and tips for entrepreneurs

Allegis Capital is just one among hundreds of venture capital firms in the U.S., but its website offers a helpful window into how a VC firm is set up and operates.

I recommend: Check out the firm's investment criteria for entrepreneurs seeking venture capital funding, tips for startup entrepreneurs and brief descriptions of companies it has backed.

Tap a free online venture capital directory of over 1,400 firms

vFinance is an outstanding online service that has one of the most comprehensive venture capital directories anywhere. There's help finding a venture capital firm, venture capital broker, China venture capital, venture capital news and much more.

I recommend: vFinance says it constantly checks its list for accuracy. Access to the complete list of VC firms is free and easy.You can also download the complete list for $199, with more detailed info on each firm. Or use their handy VC search tool. You can also post your business plan to showcase an opportunity to potential investors.

For small sum, tech startup backing, check out Y Combinator

This unique seed funding group splits its time between Cambridge MA (summers) and Silicon Valley (winters).

I recommend: Get to the Y Combinator site and read up. There's nothing fancy, but if you have a startup idea in the software or web services area and need between $5,000 and about $20,000, step up and submit your idea. These savvy startup funding folks are more interested in good ideas than slick business plans.

Try Small Business Investment Company (SBIC) financing

SBICs are licensed by the U.S. Small Business Administration but are privately owned and funded investment firms that provide venture capital for small business.

I recommend: Some SBICs specialize in certain industries, while others seek companies with innovative ideas and products, and some offer social venture capital. SBICs use their own capital, plus funds borrowed at favorable rates with a government guarantee. See the SBIC Hotlist published by the SBA. The National Association of Small Business Investment Companies (NASBIC) can also help you locate one.

Peek into venture capital funding resources at other online portals

Business financing 'portal' sites offer a variety of ways to fund a business, including venture capital.

I recommend: At BusinessFinance you'll find information on venture capital sources in the Equity Investments section. NVST's Capital Motion program offers access to angel investors, venture firms, corporate venture funds and other private equity investors.

Raise your own equity offering online

Active Capital is the only low-cost Internet-based option to register securities for sale -- up to $5 million/year.

I recommend: Active Capital is a non-profit program and Web site for entrepreneurs seeking private investment and private investors seeking deals in a secure and protected environment.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Button down your business plan. A business plan is a 'gotta have' piece in your financing puzzle. The plan should be realistic and cover all the bases. Avoid vague goals and pie-in-the-sky projections. It should document why the business needs financing, and how much is needed to reach a specified level of growth and profitability.
• •  Put in your own money. If you want others to back you and your ideas, be prepared to ante up yourself. Investors want to know that you are risking something personally and that you will go the extra mile to make it a success.
• •  Demonstrate a flair for management. The more charisma you can show on the finance dance floor, the better. And not just you, but your entire team as well. You must convey to potential funders that you are the best person on earth to manage and supervise the business you plan to create. Or if not you, that you have that person in tow.
• •  Create budgets and financial statements that tell the tale. If your business is already operational, create some basic financials on how you are doing. Don't worry if you aren't looking completely gorgeous just now. Investors know that if everything were perfect, you wouldn't be looking for money.
• •  Prepare - and then prepare some more. People with money to invest are in great demand. They've seen all kinds of plans, so they are likely to ask tough questions, be skeptical of your answers and have little patience for running off at the mouth. Your best step is to be totally comfortable with your plan.
• •  Show how much you'll need and how you'll use it. It's critical to estimate how much money you think you will need overall. All good investors will want to know this, as well as what you plan to do with the money.

Real estate venture capital is essential for businesses that need funding to support real estate projects. Finding real estate VC that fits your needs and that is in your area is crucial to the success of your business. Whether you need real estate technology venture capital support or commercial real estate development venture capital, the funds are available if you know how to present your business plan and capital allocation successfully.

Directories of real estate venture capitalist firms are excellent resources for locating venture capital for real estate start up projects or to support existing projects in the industry. When searching for venture capital real estate specialists, you should:

1. Use up-to-date directories to find real estate venture capital for your unique business.

2. Partner with an experienced real estate venture capital firm that can best meet your unique needs.

3. Create a concise business plan that explains your project needs, how you plan to allocate the capital you receive and the projected return for your investors.

Action Steps
The best contacts and resources to help you get it done

Utilize directories of real estate venture capitalist listings

Online venture capital directories offer listings of real estate VC at the local, national and international levels and the information you need to make contact.

I recommend: Use VCLocator.com to find a commercial real estate angel investor or a real estate VC firm to meet your financial needs. For a broad range of VC capital possibilities, vcaonline.com offers an affordable way to search for estate venture capitalists in any location.

Work with a reputable company that can support your real estate vc opportunities

Partner with experienced companies that can match your business needs and goals with the appropriate real estate venture capital program.

I recommend: Work with Funk Ventures, a real estate venture capital firm with a solid reputation for success. AmeriFinancial can help you strategize your investment goals and match you with the real estate venture capitalist firms that can best meet your needs.

Formulate an impressive business plan for real estate venture capital

A well-written business plan is vital when you court potential real estate venture capitalists. Use free online business plan templates to formulate a business plan or hire a reputable company to write a business plan that meets the needs of your business.

I recommend: Hire the professionals at Masterplans to create a concise business plan to attract venture capital for real estate. Choose Cayenne Consulting for your business plan needs. They can compose a detailed business plan for real estate VC that can generate interest in your real estate business ventures.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Familiarize yourself with the National Venture Capital Association for resources on venture capital real estate investment opportunities.

Attain venture capital real estate education and training to get an edge in the real estate investing field. This shows potential employers that you are legitimate and that you keep current with industry offerings.

Potential employers and clients looking for experts in venture capital for real estate want to work with someone who knows all the legalities in transactions and who offers the best deals. Getting education in venture capital strategies keeps you informed and helps you offer clients what they are looking for from a professional. To get this education, you might want to consider the following options:

1. Obtain venture capital real estate education and training by talking with a specialist in the field.

2. Check into Internet offerings to educate yourself on real estate venture capitalist trends and techniques.

3. Enhance your knowledge on the legalities of and opportunities for venture capital real estate investment by joining a real estate association.

Action Steps
The best contacts and resources to help you get it done

First, get a solid education in real estate finance

To put yourself in the middle of the venture capital market for real estate, your first step is getting a solid grounding in real estate finance.

I recommend: Business schools that specialize in real estate finance include: the Pollack Center for Law and Business at NYU, Wharton and the University of California, Berkeley. Harvard's Graduate School of Design puts on an executive education program in advanced real estate finance.

Contact a consultant to learn more about real estate venture capital firms

A consultant studies and analyzes the real estate market for a living and easily educates clients on statistics and trends regarding commercial real estate development venture capital. Consultants usually charge to provide education or training.

I recommend: John Burns Real Estate Consulting works with businesses to educate them on commercial real estate market trends. It provides detailed analysis and the latest research offerings. The National Association of Real Estate Consultants works with real estates experts to establish focus and strategies. It educates clients on trends.

Use Internet resources focused on offering information for becoming a real estate venture capitalist

There are numerous legality issues involved with real estate investments and funding for real estate venture capital, also known as real estate vc. The Internet is a wonderful resource that educates you on the legalities, and you can learn in your own time frame.

I recommend: Private Money Partnering offers information about real estate venture capital through its free web series. It offers a glossary, a blog and a forum in addition to its venture capital training. America's Premier Commercial Real Estate Coach offers a free course online to educate investors on how to make more money in real estate. It also offers a free e-newsletter to keep commercial real estate business people educated on industry trends.

Join an association that educates you in venture capital for real estate start up

You can get education in the area of venture capital real estate investment by joining an association dedicated to the field. Many organizations and associations offer workshops and networking opportunities that keep you current with industry changes.

I recommend: The National Association of Realtors offers members up-to-the-minute information on the legalities of venture capital investment. It offers courses for members who want to increase rental and selling knowledge. AIR Commercial Real Estate Association prides itself in constantly working to offer members the latest information and a great variety of resources to meet the needs of its members. It hosts networking events and site planning.

Real estate venture capital is a solution for businesses that need to raise funds for real estate projects. Investors consider the worthiness of the investment and decide whether it will be profitable. Real estate venture capital can be invested into commercial properties or into large residential properties such as apartment complexes. Many venture capitalists are looking to invest in these projects provided the business plan is feasible for a return on the initial investment.

Action Steps
The best contacts and resources to help you get it done

Accredited investor

An accredited investor is a person or couple that has an individual or joint net worth of at least $1 million. For individuals to be deemed accredited investors, they must have had income exceeding $200,000 for the previous two years.

I recommend: The Securities and Exchange Commission defines an accredited investor according to the Securities Act of 1933.

Committed funds, raised funds

Committed funds are the funds promised by investors. Committed funds can be found through private dealings or by working with private equity managers to find investors.

I recommend: VC Experts provides an expanded definition of committed or raised funds and links to additional resources.

Absorption rate

The absorption rate of real estate is the rate at which vacant spaces are sold or leased to buyers in the marketplace. The rate can be expressed in the number of units for residential properties or square feet per year for commercial properties.

I recommend: Active Rain provides an overview of real estate absorption rates and how these numbers can be used to measure success.

Earnings before interest, taxes, depreciation and amortization (EBITDA)

Earnings before interest, taxes, depreciation and amortization is an equation used to determine the financial performance of a company. This helps to determine the worth of investments for venture capitalists.

I recommend: Investopedia provides an overview of using EBITDA in business and investments.

Commercial real estate

Commercial real estate is a type of property designated to be used as a business space. Commercial properties are often used for retail and office spaces. This type of real estate is also known as income producing property.

I recommend: Advantage Commercial Brokers provides a list of advantages for venture capitalists considering investing in commercial real estate.

Fair market value (FMV)

Fair market value is a concept that designates the price at which a property can be sold. The fair market value is reached when the buyer and seller have acted with the knowledge of the market and not out of a need to sell or buy.

I recommend: Financial Web provides information on how to determine the fair market value of an investment property.