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What types of things do I need to consider if I get approached from a venture fund overseas? I had an early-stage venture fund from Germany contact me looking to learn more about our startup and what we are doing. I had honestly never even considered going overseas. I think there are some obvious things to consider, such as they probably won't have the connections or advice that you might get from a local fund, which is a big part of the funding package.

On the flip side, if the valuation and terms are right, what is there to lose?

Are there any legal hurdles or tax ramifications? Also, will I be blacklisted somehow from the local investment community if I take overseas money?

I did do some research and have talked with two other businesses that were funded by this outfit (over $200k in seed money in each case), so it does appear to be legit. That was my first concern obviously, is are they real, and will they come to my house and kneecap me if the business fails :)

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Nick, there are a few questions in your question.

On the face of it, no there is no real issue with taking offshore VC money there is a lot now coming out worldwide. Some local investors would see it as a bonus that there are contacts in Europe that can help push the product along in that market, other would be worried about conflicts of culture or control ... its down to the individuals involved.

The US isn't the only market in the world and after the 2009 crash it probably won't ever be the biggest again either. The euro and Asian markets are huge and keen to take on new investments so I think it will become far more common.

You would want to understand the terms of the agreement

  • Who's market will you be playing in first
  • What are they offering you (apart from money)
  • Can you still operate from where you are
  • What other investments do they have that make you attractive (their reason for approaching you).

Being in Australia companies we work with have investors from Australia, the US and from Europe. There are details to be worked out around reporting and understanding but in the end it can work out very well.

The final word of warning. There have been a few scams around venture funding lately and you want to do a fair bit of background checking before jumping in, but that would go for US investors as well.

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It really depends on, which business you are into. The connections of this investment fund might be far better than those you have in your country. This could be true if you are into machining or one of the other industries, which is big in the fourth biggest economy in the world, or if you plan to expand "overseas" anytime soon.

If, however, you are into some kind of online business (like most people here), I would be hesitant to accept the money, as I believe (though my experience is admittedly thin) that the network and expertise you would get is similarly important as the money.

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