Venture Capital Funding Robert Smith
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
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.
Features of Venture Capital • High Risk • Lack of Liquidity • Long Time Horizon • Provided at Early Stage • High-tech • Participation in Management • Equity Participation
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.
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.
VC Investment Process Deal Origination Screening Evaluation Exit Plan Post Investment Activity Deal Structure
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.
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.
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