What the Definition of Venture Capital Won't Tell You
The definition of venture capital, in simple terms, is investment money provided by professional capitalists and venture capital firms to promising companies in the hope that it will make more money after a few years. Aside from its definition, here are some things to discuss about this subject.
Venture fund has a relatively short lifespan. The goal, then, is to maximize profit within a short time span. These capitalists and investors have developed strategies and business plans that are "proven" to yield results, but this is not the case always. Remember that their aim is a return of investment in a short time and not a lifelong business.
Aside from the profits that they seek to have, they also charge certain fees to pay their management staff. These fees are also taken out of the fund, making it run out sooner than expected.
As a general rule, only 10% of the investments become successful. If that were the case, perhaps you'd wonder why these companies continue to operate. Since these firms have tons of money, they've somehow managed to branch out their investments in several companies. The key to success, then, is to make more good investments to offset the losses. So when everything is taken into consideration, they end up gaining more than they've invested.
If you consider this option, be prepared to lose control over your company for a couple of years. Because these investors and firms have spent big bucks to help you put up your company, they also have a say on how things get done. We're talking of major stakes here, not just a couple of hundred dollars that you borrowed from a friend.
They usually assign somebody to sit as members of the board to take part and know the decisions that you make as CEO of the company. At the same time, they report to the firm what they think of how you run things, which can be crucial should you need additional capital later on.
Venture capital is one way to get into business with minimal capital. But remember that together with it are several requirements that you must comply with. These firms have developed plans which may have proved to be effective for past businesses.
But while it may have achieved success at one instance, it is not a guarantee that the same will happen to your business. There is therefore the possibility of failure. While it may be difficult and the stakes are rather high, the gains that you may receive later are sure to outweigh the demands and difficulties that you face at present.
Here's hoping that this article made you understand the definition of venture capital better. To have more information, it is best to seek help from a professional. Ask a financial expert on the pros and cons of venture capital and how it can be availed.
He can also help prepare your business proposal to make it more attractive to capitalists and angel investors. There are a few websites which provide this type of service.
Comments
Menu
My Articles
Venture Capital – Knowing Your Funding OptionsWhat Do Venture Capitalists Want?
Venture Capital And Its Characteristics
Venture Capital Firms In New York: Chase Your Dreams
How And Where To Find Venture Capital Insurance
Astellas Venture Capital: Aim Big
Advantage In New Orleans: Capital For The Underdogs
Venture Capital Cycle – How Does It Go?
Venture Capital – Things That You Should Know
The Advantages Of Taking Venture Capital Courses
Sources Of Venture Capital News
Making A Difference With Non-Profit Venture Capital
Kinds Of Venture Capital Jobs
What The Definition Of Venture Capital Won't Tell You
Venture Capital: The Basics
Venture Capital And Grants – Is It Right For Your Business?
Pitfalls To Avoid In Applying For A Venture Capital
How To Raise Venture Capital Funding
Venture Capital Fund: A Viable Risk?
What Is Venture Capital Fund?
What You Need To Apply For A Venture Capital
Kinds Of Venture Capital Firms And What They Do
Choosing The Best Venture Capital Consultant
What Is A Venture Capital Course?
Related Sites | My Articles Venture Capital: The Basics A lot us have ideas, but the real challenge is making them.. Pitfalls To Avoid In Applying For A Venture Capital Most entrepreneurs know what they have to do when searching for.. What Do Venture Capitalists Want? Venture capitalists come across a lot of companies that need funding.. Astellas Venture Capital: Aim Big The foundation of every business, other than its product,.. |
|
|
Related News:
|