What is venture capital?

Answer 1

The term venture capital (VC) is used for a variety of investment scenarios that help entrepreneurs fund the growth of their business through outside investment/debt.

The prototypical venture capital transaction involves a professional venture capital fund, investing money in exchange for preferred stock in a company. Professional VC funds invest as a full-time job and typically expect to have a board role in helping to grow the companies they fund. VC investments come with a need to eventually exit their investment via M&A or IPO -- so returns can be distributed to the limited partners and general partners invested in the VC funds.

There are many variations from that standard that are, rightly or wrongly, still referred to as venture capital. Some of those variations include non-professional investors (friends/family, angels, investment bankers, corporations). Some also fund via debt instruments or purchase common stock instead of purchasing preferred stock. Some expect to have full-time management roles, while others offer money but no additional value-add. Venture capital is often associated with early-stage companies, but it can span stages to overlap with mezzanine, hedge and LBO-type funding.

The venture capital asset class is part of the broader category of "alternative investments" that institutional investors (foundations, endowments etc.) use to diversify their portfolios, typically with a higher risk and return expectation than other asset classes such as public stocks, bonds or treasuries.

Answer 2

In real language - you want to start a company (or need cash for another "good" reason), but you don't have the cash. You go to investors and sell your idea, they give you $$$. They get equity in your company and then when someone buys you/you go public they get paid off.


Wikipedia answer:
Venture capital is a type of private equity capital typically provided by outside investors for financing new, growing, or struggling businesses. Venture capital investments are generally high-risk investments but offer the potential for above-average returns and/or a percentage of ownership of the company. A venture capitalist (VC) is a person who makes such investments. A venture capital fund is a pooled investment vehicle (often a partnership) that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans.

Answer 3

Venture capital is money given to a new business at start up. If you want to set up a business but do not have the funds you can go to a venture capitalist firm and if they like your idea they will lend you money on some pre-agreed terms.

Answer 4

Wealthy individuals and companies provide money to Venture Capital firms to invest. Some of the money gets invested in startup companies. This is refered to as venture funding. To get venture funding you have to submit an Executive Summary and business plan with current and projected financials to venture capitalists through their website, fax or mail. They will get back to you if they are interested. Most of them will reply one way or the other.

Answer 5

Hello,

(ANS) The term "venture capitol" is used for projects, new inventions, new buildings, innovative ideas, new business start up's anything that generally involves a higher than normal level of risk.

**Investments in projects or business developments that normal banks or financial instituations wont take on.

**There are specific companies that do nothing else but invest money or funds as venture capitolists. They are prepared in analyse the risks & potential benefits (profits or returns on there investment) and may be the only people prepared the back a venture were others wouldnt.

**Venture capitol is a high risk high return game if you like. The potential for high losses but the potenial for high gains too.

IR

Answer 6

Money pooled together by private venture capital firms to invest in enterprises that are too risky for the standard capital markets or bank loans.

Answer 7

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Answer 8

It is money put up by a private investor for a new venture. Basically you sell a share of a business or business idea to a private investor in order to raise funds to grow / start the business. If you ever saw the show "Dragon's Den", the 'Dragons' were acting as venture capitalists.

Answer 9

challenge capital is capital presented through outdoors investors for financing of recent, starting to be or suffering organizations. challenge capital investments usually are severe threat investments yet grant the flair for above average returns. A challenge capitalist (VC) is someone who makes such investments. A challenge capital fund is a pooled funding motorcar (typically a partnership) that mostly invests the monetary capital of 0.33-celebration investors in organizations that are too volatile for the classic capital markets or monetary corporation loans.

Answer 10

its capital put up by a wealthy business person to help someone start out in a business for a share of their profit, the people who do this are venture capitalists, like the lions den programme on BBC