VENTURE CAPITAL FINANCING
Venture capital is money provided by individual investors or entities seeking a high
return on their investment in privately owned business. In order to get those high
returns, venture investors are willing to accept a relatively high degree of risk of loss
of their investment. It is also known as seed capital or private capital. Venture capital
is mostly used to help businesses that have high potential for growth and related
with technology oriented. Venture capital funds are used primarily for companies
who may not have sufficient operating history to qualify for traditional loans through
a bank.
The organization that provides venture capital us called venture capitalist or venture
capital fund
Venture capital is a form of private equity and a type of financing that investors
provide to startup companies and small businesses that are believed to have long-
term growth potential. Venture capital generally comes from well-off investors,
investment banks, and any other financial institutions. However, it does not always
take a monetary form; it can also be provided in the form of technical or managerial
expertise. Venture capital is typically allocated to small companies with exceptional
growth potential, or to companies that have grown quickly and appear poised to
continue to expand.
According to SEBI (Venture Capital Funds) Regulations, 1996, a venture capital fund
is a fund establishes in the form of a trust or company including body corporate and
registered under this regulation that has a dedicated pool of capital raised in a
manner specified in the regulations and invests in accordance with these regulations.
FEATURES OF VENTURE CAPITAL
Venture capital combines the qualities of a banker, stock market investor and
entrepreneur in one. The main objective of venture capitalist is to get abnormal or
exceptional returns on their investment.
, Some of the features of venture capital financing are as follows:
High Degrees of Risk: Venture capital generally represents investment in a
highly risky project with the objective of earning a high rate of return.
Equity Participation: Venture capital financing is an actual or potential equity
participation wherein the objective of venture capitalist is to make capital gain
by selling the shares once the firm becomes profitable.
Participation in Management: Venture capital involves not only investing
money but also active participation in the management of the company by the
venture capitalist.
Investment in Small and relatively new companies: Venture Capital Financing
is usually done for companies which are small level or medium level and also
relatively newly formed companies are the preferred choice of venture
capitalist.
Long Term Investment: Venture capital financing is a long-term investment. It
generally takes a long period to encase the investment in securities made by
the venture capitalists.
Stages of Venture Capital Financing
There are five distinct stages of venture capital funding:
Seed or early stage
Growth stage
Start-up stage
Late stage
Buyouts/recapitalizations.
Venture capital is money provided by individual investors or entities seeking a high
return on their investment in privately owned business. In order to get those high
returns, venture investors are willing to accept a relatively high degree of risk of loss
of their investment. It is also known as seed capital or private capital. Venture capital
is mostly used to help businesses that have high potential for growth and related
with technology oriented. Venture capital funds are used primarily for companies
who may not have sufficient operating history to qualify for traditional loans through
a bank.
The organization that provides venture capital us called venture capitalist or venture
capital fund
Venture capital is a form of private equity and a type of financing that investors
provide to startup companies and small businesses that are believed to have long-
term growth potential. Venture capital generally comes from well-off investors,
investment banks, and any other financial institutions. However, it does not always
take a monetary form; it can also be provided in the form of technical or managerial
expertise. Venture capital is typically allocated to small companies with exceptional
growth potential, or to companies that have grown quickly and appear poised to
continue to expand.
According to SEBI (Venture Capital Funds) Regulations, 1996, a venture capital fund
is a fund establishes in the form of a trust or company including body corporate and
registered under this regulation that has a dedicated pool of capital raised in a
manner specified in the regulations and invests in accordance with these regulations.
FEATURES OF VENTURE CAPITAL
Venture capital combines the qualities of a banker, stock market investor and
entrepreneur in one. The main objective of venture capitalist is to get abnormal or
exceptional returns on their investment.
, Some of the features of venture capital financing are as follows:
High Degrees of Risk: Venture capital generally represents investment in a
highly risky project with the objective of earning a high rate of return.
Equity Participation: Venture capital financing is an actual or potential equity
participation wherein the objective of venture capitalist is to make capital gain
by selling the shares once the firm becomes profitable.
Participation in Management: Venture capital involves not only investing
money but also active participation in the management of the company by the
venture capitalist.
Investment in Small and relatively new companies: Venture Capital Financing
is usually done for companies which are small level or medium level and also
relatively newly formed companies are the preferred choice of venture
capitalist.
Long Term Investment: Venture capital financing is a long-term investment. It
generally takes a long period to encase the investment in securities made by
the venture capitalists.
Stages of Venture Capital Financing
There are five distinct stages of venture capital funding:
Seed or early stage
Growth stage
Start-up stage
Late stage
Buyouts/recapitalizations.
