|
Venture capital is funding made available to companies by venture capitalists (“Investors”) who purchase equity shares in the business for their investment.
An entrepreneur who receives venture capital should be clear that a venture capitalist’s primary motive is to make money on the intended investment. Venture capitalists take higher risks with their investment dollars and expect to make high returns on their investments.
A venture capitalist typically negotiates an ownership interest for the money he or she invests in a particular company. Venture Capitalists can either invest individually or together as a group Typically groups of Venture Capitalists are investment funds or partnerships that focus on investing in promising start-up and emerging companies. It is money ranging in amounts from $100,000 to $10 million provided by professionals and/or angels who invest alongside management in young, rapidly growing companies in existing or emerging sectors.
Beyond supplying the company with money, sometimes the venture capitalist provides assistance and expertise – often bringing industry knowledge, personal experience in growing businesses and in some cases even expertise in taking a company public.
A venture capitalist generally:
-
Finances new and rapidly growing companies
-
Purchases an equity stake in the company
-
Assists in the development of new products and/or services
-
Adds value to the company through active involvement in business activities
-
Has a long-term orientation, but expects to exit from the investment at some point.
An entrepreneur who receives venture capital should be clear that a venture capitalist’s primary motive is to make money on the intended investment. Venture capitalists take higher risks with their investment dollars and expect to make high returns on their investments. For more information on venture capital, visit GrowthWorks.
| 
