High growth incorporation tends to choose venture capital funding to hasten the next growth phase. Venture capitalists who focus on the company's growth pattern don't require the pledging of assets as required by lenders like banks.

Venture capital financing is an option for corporations with a unique corporate proposition that may earn high returns on investment of at least 30% a year. These corporations require large outlays of capital. Venture capitalists normally take an ownership stake, to share in the corporation's business risk and profits. Therefore, it may become one of its institutional shareholders. In return, the corporation will benefit from the financial and operational support provided by the venture capitalist's management team.

An important consideration for the corporation is to obtain enough capital to capture market share quickly and additional funds raised through a venture capitalist can give the corporation sufficient working capital to market, brand and sell the company's products.

Having an institutional shareholder or venture capitalist in a corporation, gives confidence to your customers, as the shareholder would have done due diligence on the corporation and there is a brand associated with it.

Having a venture capitalist on board also means that corporate governance is part of the company's policy from the start. However, a drawback of venture capital financing is that a corporation may feel a lack of control as the venture capitalist has stringent covenants like not allowing the corporation to change its business direction without prior approval.

Some corporations can't understand the difference between lending and investing, as defined by the venture capitalists; they invest based on the risk and value of the company and when it's mature for exit, they get a higher value. So, it is not about lending in the conventional banking sense. When a corporate man approaches a bank, he usually asks how much the interest is, the interest payments and what the principal is.

A corporation may also fear that the venture capitalist may pull out by selling or diluting its stake, if the corporation doesn't perform well. This is one of the reasons a corporation resort to bank borrowings instead.

A corporation should view venture capitalists as committed to invest in the company's growth, thus creating value for themselves while providing strategic guidance, business network contacts and sales referrals.

It is advisable that corporations to be prepared to give up the controlling stake; an issue that many corporations are uncomfortable with. However, rather than focusing on losing control, a corporation should consider the benefits derived. When the venture capitalists invest in a business, there is a certain standard or value placed on the company.

A corporation needs to decide if the benefits of venture capital funding outweigh the disadvantages and how important retaining ownership is in the entire equation.

When selecting the corporation in which to invest, venture capitalists tend to look at four criteria, which are people, technology, capital and market. A venture capitalist also usually selects a growing corporation with a bottom line or profit after tax is growing by at least 25% annually.