An Investor Should Know How Venture Capitalism Works
29614
Finance
Jun 20, 2007
LowJeremy
An Investor Should Know How Venture Capitalism Works
Venture capitalism is a system wherein a person or a company often referred to as venture capitalists invest money in a company or business exchange for a stake in the business or a share in the earnings, present and future, of the company. Venture capitalists are frequently the ones that provide funding for companies that are in need of seed money to start up their business. Often, they support businesses that have a high potential for growth and those that they feel will return their investments multiple-folds. Companies that have innovative ideas and products are primary targets of venture capitalists. They are also partial to industries that are into innovations like Information Technology, Biotechnology and the medical fields. Other venture capitalists focus on providing capitals for already established companies who are seeking to expand their operations while some rescue companies that are in trouble and those that badly need restructuring. There are also venture capitalists that go into buyouts and company takeovers but of course, these are just a few. Often, venture capitalists do not just provide money but also the know-how. They help fledgling companies start by offering their managerial, executive and marketing expertise. They can also provide the contacts in the industry as well as other business requirements. Venture capitalism starts with the business plan submissions, which the company seeking seed money can pass or the venture capitalist company can submit. The business plan should more or less include a description of the size of the target market, the people that will work behind the team, the technology and the product that the company will be offering, and the financial projections. It is also important to include a summary of the business concept at the beginning. Remember that these venture capitalists do not have the time to read through the rest of the proposal. Your summary will determine if they will be interested or not in your business. After submitting your business plan, wait for three weeks and then follow up with the venture capitalist. If you are lucky to make the cut, you will be scheduled a face to face meeting with the venture capitalist, where you can present your case in the flesh. This might help them make their decision. On the average, venture capitalists receive about 200 business plans in a month. Only about five percent will be invited for a face to face meeting; so make the most out of your meeting and present a case that they can't possibly ignore! There are two types of people in the world. These are the rich who have money and those that don't. When the person has money, there will be no problems going on a shopping spree in New York or hop on board a plane to see paradise in the Bahamas. The average Joe can also do that but will have to same that amount over a few months or even years. If the rich individual doesn't do anything to preserve the wealth, this will soon disappear. This is the reason that being a venture capital investor seems to be a good idea. A venture capital investor is an individual who would like to help fund an entrepreneur. There are two kinds namely the person who will wait to receive such a proposal while the other is out there hoping to see something interesting. In the end, the venture capital investor will be reviewing the business plan to make sure it is sound and also meet the entrepreneur in person to clarify some issues. There are some people who might take advantage of the individual so a background check will be done even before the meeting takes place. The venture capital investor who is well aware of the trends for example in the information technology will not want to do business in a field that is unknown to that individual. This means the person will only gamble on a high-risk investment in the preferred comfort zone. This approach is advantageous to the entrepreneur because the years of experience in that field can be useful in the partnership. What does a capital venture investor get from all of this? In exchange for the money being shelled by the individual, there are also a certain number of shares that will be given to get a seat among the board of directors. This will ensure that the investor can play an active role in the direction of the business to be able to safeguard the money that was invested into the project. As the company grows, the money invested by the investor will be returned and the profits will be shared increasing the current wealth of the person. Being a venture capitalist is a win-win situation for the individual and the entrepreneur. After all, two heads are better than one in making the day-to-day decisions so the company will become profitable in the long run.
Low Jeremy maintains http://Venture-Capital.ArticlesForReprint.com. This content is provided by Low Jeremy. It may be used only in its entirety with all links included.
send email to LowJeremy
Write a Review
Add to My Favorite
Refer it to Friend
Report Article
Other links owned by this user
Metal detectors of all types may be termed as device for hobbyists either in land (parks, beaches, shores, and even in ballpark bleachers), or deep-sea waters. Seldom would hunters of all kinds set to track on land, or to ferry on sea without this device.
Category:
There are different kinds of toys you could purchase for your children. But there are only a few educational science toys to help you children improve science-wise; at the same time have fun. Mixing business with pleasure is indeed possible.
Category:
The prospect of having to get down to tax filing preparations can get you down. The process of tax filing preparations is tedious and can be difficult to factor in to your busy schedule. Luckily, aside from hiring an expensive certified public accountant
Category:
Income tax filing preparations can be a very complex process. There are different tax situations that entail different treatments. You will need the necessary know how and skills to be able to prepare your income tax for filing. This complex situation can
Category:
There are two conditions that will identify if there is any need of using infertility drugs. One, if the woman is unable to ovulate therefore there is a need for assisted development of the egg cells. And second if there is a need to increase the chances
Category:
TV calibration, or rather, setting your television's image settings at the optimum levels according to your preferences can do wonders for your television and your television viewing experience. TV calibration can be used on old TV sets to be able to boos
Category:
Rapid prototyping is the method of constructing physical objects using solid freeform fabrication. The use of rapid prototyping techniques had its start during the 1980's where it was used to build product models.
Category:
Buying a house or a car is a huge decision because of the money involved. This is the reason that customer will look into the budget first and check if the salaries of the spouses can pay the monthly amortization before pushing through with the deal.
Category:
The basic principle in rapid prototyping is done in broad applications on wide range concept designs. The range covers no bound, but commonly applied to medical, engineering, and industrial discipline. It involves the digital capabilities of computers to
Category:
Computers are focal point of our highly technological civilization. It is because of the creation of computers that we have been able to progress globally. Computers have made our lives easer by providing automated solutions to tasks that would other wise
Category:
One good step in decreasing the probability of multiplying your troubles is by selecting an efficient clinic. Know them by the attributes of their services and completeness of their working staff.
Category:
When Barbie came out in 1959, no one thought this doll will be able to capture the hearts of people both young and old. After all, other toys came out before that but somehow only this company has survived for more than 50 years.
Category:
Triathlon is basically a game of endurance. Your training, your stamina and your willingness will all help you know what it's like to reach the finish line. And the equipments you will use can also add up to your real race standing.
Category:
In the world of dolls, Barbie has been considered as a leader in the doll market worldwide. Since her launch 40 years ago, Barbie continues to reinvent herself by appearing in numerous themes.
Category:
Children have this natural character to learn. They have this ability to absorb new information and react to a stimulus almost like a sponge. Daily experiences, for instance, are excellent avenued in which children can learn. In this regard, games and pla
Category:
It is said that if all the barbies that have been sold in the market since 1959 are to be placed one over the other from the head to the toe, the dolls would have circled the earth not just once or twice but seven times.
Category:
Studies show that 90 percent of all types of headaches are classified as tension and muscle contraction. However, there most experts would agree that headache could be further classified into two broad categories: the primary and the secondary.
Category:
A solution is the result of the method or process of finding the answer to a problem. A business is a complex system that, simply put, needs to constantly find solutions to problems tied to productivity and cost. Now, each business has a product.
Category:
A lot of experts say that the best way to teach a child a certain subject or value is to introduce the concept during his or her play time. Because kids give their utmost attention to things that interest them, it is but natural to presume that they will
Category:
Spectrum analyzers may seem really technical and scientific to the ears. This is because spectrum analyzers are often used in factories and in laboratories.
Category:
Other links at Finance
Online option trading fortune has become one of the most popular money makers among all forms of financial instruments available on the investment floor.
Category:
Car insurance is like many things in life. You will have a policy that will change over time. Usually it will change every six months or twelve months depending on the type of plan you have signed up. There are many tips you can follow to keep your car in
Category:
Perhaps you have heard the term margins before, but you don't have a very clear idea of what this means. Find out what margins are and how to the risks/benefits associated with these.
Category:
They say there's more than one way to skin a cat. The same goes when you start tearing your hair out with all the frustration, grief, anxiety, and yes, stress.
Category:
In case you did not know, penny stocks can actually be a lucrative investment if you know what you are doing
Category:
Site Sponsor
Directory Statistics
Articles: 68252
Categories: 501
Yahoo Entertainment
