In simple terms, venture capital is the kind of financing in which the capital is invested in a company, which is usually either a small business or a start up (basically something that is in need of the money) and this is done in exchange for the equity in the company. This is also quite a major subcategory of a quite larger and a much complex part of the landscape of finance which is also known as the private markets. Venture capital is the sum of money that gets invested in a business in its early stages, the growth stage of any kind of business or company.
It is important to remember that venture
capital funding is not given to just any business. It is given to only those
that shop an exceptional growth potential or to those businesses that, in the
recent past, have shown a very quick growth and also show proof of how they are
going to quickly expand.
Amongst financial
advisory services will tell you as an investor that it is a very risky
thing to invest in venture capital. However, it is also true that this is
becoming an increasingly popular concept and even essential in a way which is
becoming a source for raising money if they lack access to capital marketing,
loan instruments and so on. Investors usually get equity in the company and
hence, also a good say in the decisions that the company makes and that is an
added advantage.
In a way, the concept of venture capital
has evolved from quite a niche activity after the Second World War ended as it
is in a sophisticated industry with multiple people and players which also play
a crucial role in inciting innovation.
Therefore highlighting the importance of
venture capital funding.
No comments:
Post a Comment