Venture Capital
Venture capital (VC) is money provided by professionals who invest alongside management in companies that have the potential for rapid growth and revenue generation. VCs can be generalists, investing in various industry sectors and geographies, or they may be specialists in one or two industry sectors or geographies. Depending on the investment focus and strategy of the venture firm, it will seek to exit the investment in the portfolio company within three to five years of the initial investment. VC firms generally:
- Finance new and rapidly growing companies
- Expect a high return on investment (greater than 30% per year)
- Assist in the development of the company with experience and relationships
- Have a long-term (3-10 year) orientation
- Invest in a small percentage of the businesses they review
Venture capital can be an excellent source of start-up financing, and difficult to land. The right venture capitalist may be vital to the new company's success because of who he can introduce the entrepreneur to and his management expertise. However, entrepreneurs should be prepared for the challenges of venture capital as well. VCs may require a substantial percentage ownership in the company, may request a separate class of stock from founders, and may be highly involved in determining who leads the company and what direction it takes.
Furthur Information
- National Venture Capital Association*: Association For VCs With Info And Contacts
- PriceWaterhouseCoopers MoneyTree: A List Of Recent Deals By Region, Industry And VC
- Venture Capital Journal: Articles On Events And Statistics In the VC Industry
- Vfinance.com: An Internet Portal For VC
- Venture Finance: VC Industry News
- National Venture Capital Association Member Directory
