Venture Capital

Venture capital (VC) is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel business concept or business model in high technology industries, the typical venture capital investment occurs after the seed funding round as growth funding round.

In addition to angel investing and other seed funding options, venture capital is attractive for new companies with limited operating history that are too small to raise capital in the public markets and have not reached the point where they are able to secure a bank loan or complete a debt offering. In exchange for the high risk that venture capitalists assume by investing in smaller and less mature companies, venture capitalists usually get significant control over company decisions, in addition to a significant portion of the company’s ownership.

Venture Capitalist firms differ in their approaches. Some of the factors that influence VC decisions include:

• Business situation: Venture Capitalist tends to invest in new ideas, or fledgling companies. Others prefer investing in established companies that need support to go public or grow.
• Some invest solely in certain industries ( Industry Specific )
• Some prefer operating locally while others will operate nationwide or even globally.
• Venture Capitalist expectations often vary. Some may want a quicker public sale of the company or expect fast growth. The amount of help a VC provides can vary from one firm to the next.
• Some look for company’s management team , can be more important to a venture capitalist than the company’s product and examines the capable, committed set of managers who are adaptable and comfortable with growth and change.
• Will examine promoter’s commitments to the business through personal financial stakes, will move back investing in any enterprise in which the principals are unwilling to invest their own.
• Some Venture capitalist’s consider realistic set of financial projections and clear exit strategy for the investment, return back out of the company.

Any one seeing venture capitalist need to tailor one’s business plan into a venture capital pan, venture capital plan differs in the following ways

• It is a strategic document in that it not only sells a financial plan to investors, but the company’s vision, future goals and potential.
• It must clearly demonstrate how the company intends to repay the venture capitalist’s investment and what the exit strategy will be.
• It must be described exactly how much money the company wants and what it will use it for.