The Basics of Venture Capital Funding - PowerPoint PPT Presentation

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The Basics of Venture Capital Funding
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The Basics of Venture Capital Funding

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  1. Venture Capital Funding Robert Smith

  2. Contents • Introduction • Features of Venture Capital • Advantages of Venture Capital • Disadvantages of Venture Capital • Stages of Financing • VC Investment Process • Venture Capital in the USA • Conclusion

  3. Introduction • Venture capital is the financial capital provided by investors to early stage, high potential and startup companies. • Venture capital firms get money by owing equity in the company.

  4. Features of Venture Capital • High Risk • Lack of Liquidity • Long Time Horizon • Provided at Early Stage • High-tech • Participation in Management • Equity Participation

  5. Advantages of Venture Capital • It provides large sum of equity finance. • It brings wealth and expertise to your company. • VC funding is not a loan scheme, so there is no repay schedule. • Easier to secure future funding through venture capital funding.

  6. Disadvantages of Venture Capital • Lengthy and Complex process. They need detailed business plan and financial projections. • You have to add a member of VC firms in your company’s management team. This can create internal problem in the company. • At deal stage you have to pay for legal and accounting fees.

  7. Stages of Financing

  8. VC Investment Process Deal Origination Screening Evaluation Exit Plan Post Investment Activity Deal Structure

  9. Venture Capital in the USA • It is hard to create VC firms. • For two-third of VC firms, the first fund is their last fund. • Only 10 % of VC firms launch more than four funds. • Difficult for VC firms to become a two-tier. • Venture capitalists invested some $29.1 billion in the U.S. through the fourth quarter of 2011.

  10. Conclusion • The venture capital firm is an uncommon institution. It rises on reputation and skills of its person. • VC firms can assist small companies to upgrade their technology. • Continued success is needed to become top-tier firm.

  11. Reference Links • http://www.mytopbusinessideas.com/advantages-venture-capital/ • http://en.wikipedia.org/wiki/Venture_capital • http://iveybusinessjournal.com/publication/venture-capital-firms-in-america-their-caste-system-and-other-secrets/ • http://bit.ly/18xGcx1

  12. Thank You !!!