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Social media and venture capital

There are multiple financing options for entrepreneurs who have good business ideas. In addition to using their own funds, asking family members and friends to invest or trying to obtain a loan from a financial institution, they can attempt to obtain funds from venture capitalists. Startup entrepreneurs may be able to take advantage of social media to get the desired outcome when seeking venture capital.

Social media can be used to overcome some of the obstacles of obtaining traditional funding. In fact, the results of a recent study by the Wharton School of Business show that the ability to get funded and being active on social media are directly linked.

With social media, startups are able to address a vast audience and offer vital information about the company. Angel investors who are seeking investment opportunities, but do not have the organizational structure to conduct pertinent research, can become interested in the startup as its number of followers rise.

The study results show that Twitter is used by 60 percent of startups to spread brand awareness. Another 47 percent use Facebook while LinkedIn is used by 36 percent.

Researchers found that simply having a presence on Twitter does not automatically correlate to additional funding. They also determined that the number of tweets posted does not have a significant impact on the funding results. In fact, an excessive number of tweets can have a negative impact on how a company is perceived.

An attorney who practices business and commercial law may assist startup entrepreneurs who are seeking venture capital. Legal counsel could protect the rights and interests of a client by reviewing and negotiating the terms of investment contracts.

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