Savvy small business owners are well aware of the significant benefits to receiving money from venture capitalists; indeed, the value of access to the necessary capital to accelerate development and growth cannot be overstated.

Moreover, venture capitalists are quite well connected and can open doors to potential business partners, customers and possibly key personnel. Without question the advantages of taking VC funds can be considerable. But so too, can the costs.

When a business is looking to bootstrap funding, the window of opportunity may be open for just a short period of time, since others may be working on a similar or competing product. But even if you’re running the race for first place, take the time to recognize and fully absorb a few basic elements of a VC “marriage” before entering into the relationship.

Your company will no longer be “your” company; it will be owned by you and the investors; furthermore, you may have the great idea, but if you’ve never run a company or held a senior management position in a company other than your own, it is likely the VC will want a new CEO who will be answerable to a board of directors.

More requirements and controls will be placed on the business. The VCs, via their board membership, will be involved in capital expenditure approvals over a certain dollar amount, they will require either reviewed or audited financial statements, formal compensation programs, business plans and budgets. And mark your calendar for a quarterly – or even monthly –status update meeting with the board of directors. These are not bad things but they can be annoying and frustrating to an entrepreneur.

Understand that the strategic direction and initiatives of the company will be determined in conjunction with the board of directors. You, as the founder and potentially the CEO, will still have input, but will no longer be the sole decision-maker.

As founder of the company, you probably are a shareholder. But don’t confuse common stock with preferred stock, for they are not the same. VCs invest in preferred stock, and this class of stock generally has significantly greater economic and often increased control rights than common stock.

Understand Money Values

You must thoroughly understand pre-money and post-money values of the company as they are the pieces of the value puzzle. For example, if a VC is buying preferred shares and paying $2 per share for the preferred stock, he takes that $2 value and multiplies it by the fully diluted shares outstanding prior to his investment. This is the pre-money value.

The post-money value is then determined by adding the cash invested by the VCs – this value treats all shares as common shares. Seems pretty straightforward, except for one thing: The VCs are generally buying preferred shares which have superior economic rights, rather than common shares, which may include a liquidation preference (return of the capital which they invested) which can sometimes be greater than 1 to 1; participation rights (rights to share in the value with the common shares); and/or rights to cumulative dividends. In brief, these economic rights come with a great deal of value and dilute the worth of the common stock.

Recognize that most VCs have expertise in specialized areas – software, social media and biotechnology are a few of the “hot” ones. Focus on VCs that specialize in your industry or market sector, as it will save a great deal of time and energy in the long run. If you insist on pursuing a VC that does not have an expertise in your field of business, you are sending a couple of messages: You’re desperate and you waste resources chasing a bad idea. Neither will help your cause.

Ultimately, taking VC money is not a “bad” thing, nor are VCs unscrupulous people to be avoided. They are professional investors with an obligation to provide their clients an acceptable return on the investment while helping the businesses grow and prosper. They can be an enormous asset and resource to the company beyond the dollars invested. You both have the same goal – the company’s success. You just need understand the journey you are about to embark on.

John O’Brien is managing director of The BVC Group (www.thebvcgroup.com)