When Is the Right Time for a Business Owner to Bring in Venture Capital?

The decision to open a company’s capital to external investors is one of the most defining moments in the life of any entrepreneur. It means sharing not only future profits, but also vision, strategy and, in many cases, the very control over the company’s destiny. Knowing when and how to do it is essential — and understanding the different financing options available is the first step.

1. The different forms of business financing

As a company grows, financing options evolve according to its stage of development and risk profile:

Founders’ equity – usually the first source of funding. It provides full autonomy but limits growth once personal resources are exhausted.

Bank financing – suitable for companies with stable revenues and assets that can serve as collateral. It is predictable and relatively cheap in terms of capital cost, but inflexible and collateral-dependent.

Business Angels – individual investors who bring capital, hands-on experience and networks. Ideal for very early stages (pre-seed or seed), though their involvement tends to be personal and episodic, depending on each investor’s availability and profile.

Venture Capital – specialised funds investing in companies with high growth potential. Although traditionally focused on expansion or consolidation stages, venture capital increasingly participates in seed rounds in a more regular, structured and professional manner than business angels.

Private Equity – typically enters at more mature stages, financing acquisitions, international expansion or restructuring efforts.

Each format suits different moments and needs. Venture capital is particularly relevant when a company has already demonstrated traction but needs to accelerate growth — whether by entering new markets, investing in technological innovation, or strengthening the team.

2. The added value of venture capital

More than just financial support, venture capital brings professional expertise.

Venture capital investors take an active role, offering:

Strategic and managerial support, helping structure teams, governance and processes;

Access to international networks, opening doors to partnerships, customers and future investors;

Financial discipline, essential for preparing future investment rounds or even an exit.

In many cases, venture capital acts as a growth partner, capable of helping transform a good company into a great one.

3. Profiles and expectations of different investors

Each type of investor has its own risk tolerance, time horizon and return expectations:

Banks seek security and liquidity; they expect regular interest and full repayment.

Business angels accept high risk but value close involvement and significant upside within 3 to 7 years.

Venture capital funds operate under a portfolio approach: some investments may fail, but others are expected to multiply capital several times, offsetting overall risk.

Institutional investors and family offices tend to prefer stability and a long-term vision.

Aligning a company’s strategy with the investor’s profile is the key to building a sustainable partnership.

4. Synergies between founders’ equity and venture capital

Many entrepreneurs hesitate to dilute control. However, hybrid models exist in which venture capital joins without displacing founder leadership.

There are also co-funding mechanisms where risk is shared between entrepreneurs and institutional investors — amplifying the impact of initial funding.

In Portugal, there are additional opportunities to access co-investment venture funds in which public and private entities invest alongside each other, strengthening the entrepreneurial ecosystem.

5. The importance of investing in Portuguese venture capital funds

Finally, it is crucial to remember that venture capital funds can only invest if they themselves receive investment.

Without committed capital from individual, institutional or corporate investors, there is no capacity to support startups or help SMEs scale and professionalise.

Investing in national funds is therefore a way to strengthen Portugal’s economic fabric, create jobs and retain talent.

In conclusion, opening capital to venture investors is a milestone of business maturity. It is not just about money — it is about sharing vision, accelerating growth and building the future with partners who bring real value to management.

With experience and insight, we help companies make informed, solid investment decisions.

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