Advantages And Disadvantages Of Business

Venture capital firms typically appoint representatives on the company’s board and offers strategic advice to the

Once the course of action is financed and the venture begins working, the venture capitalist accomplices himself with the endeavor as an assistant and

Angel investors are different from venture capital and private equity as it ensures seed level investment from $100K-$1 million as against venture capital which offers $3 million and private equate offering $10 million plus as investment. This way Angel investors act as a starter of equity rising. Also there is no need to leave ownership up to some level for investment in case of Angel investment. This way they assist the entrepreneur in starting a new business and making financial arrangements for them without taking away their partial ownership rights from them. The efforts are made to assist the business with the financial requirements so that the establishment of the business becomes easier and an expected amount returns comes back in coming 3-10 years of time

companies, and help fill in functional or skill gaps in the company. They introduce the

especially emerging high-tech firms to undertake a high risk and looking forward to a higher rate of return. Therefore, I think meaning of the existence of venture capital is that many small and medium unlisted companies through this way of to support the

Obtaining VC is different from raising a loan. Lenders have a legal right to interest payment of the principal irrespective of the business success/failure. VC is invested for an equity stake in the business. The return of the VC as a shareholder depends on business growth /profit. Return is earned when the venture capitalist "exits".

The problem of increasing VC interest is that companies tend to take as much as they can. Since equity is easy to obtain in the current climate, companies might end up aggressively pursuing it even when it isn’t necessary.

Other more ingenious entrepreneurs raise seed capital through raising debt capital, sweat equity and funding from friends and family. VC is usually raised with early stage funding, i.e. as above, series A or series B funding. In most cases, VC's will not invest less than $1 million in a company.

Preparation is the key to obtaining an initial meeting with the institutional venture capitalist. There are three central components to the preparation process: business and strategic planning; effective networking; and narrowing the field. A well-written business plan and financing proposal is a necessary prerequisite to serious consideration by any sophisticated source of capital. Effective networking means using professional advisers, commercial lenders, investment bankers and consultants who may be able to assist you to get the business plan into the hands of the appropriate venture capitalists. Institutional sources of capital are often flooded with unsolicited, “non-introduced” plans that are more likely to end up in a wastebasket than before an investment committee. Remember that the average venture

Different Opportunities for Sourcing Capital for the new venture / Benefits and Dis-benefits of each funding source:

The VC industry itself is divided on the basis of the different stages of investment. Angel investing refers to individual investors, who are often the first group of investors in a new enterprise, who provide capital and mentorship. Angel investors invest in companies before VC firms, who invest in the next round of fundraising, what is often dubbed as Seed Stage, which accounts for about 2% of total VC investments (NVCA). At the Seed Stage, the portfolio company has just been founded, and its product is still in development. (NVCA) Clearly, at such an early stage, it is nearly impossible to make any meaningful financial projections, since the company lacks a product to offer.

The VC firms should then go ahead to make clever investments so they can give the limited partners their cash back… in addition to a benefit.

Be wary, as this can easily become a hurdle if your investor and you have different visions for your startup. An investment from a venture capitalist would be perfect for larger startups or e-commerce sites since investors have more equity to invest. They can also offer their expertise in guiding your business to a successful and profitable business venture. In fact, may even decide to bring their other deep-pocketed friends around if they really believe in your company.

And the raising of venture capital or mezzanine financing can be time-consuming and expensive. Also, both of these options involve giving up equity in your company and perhaps even a controlling interest. Sometimes this equity can be substantial, which can end up being very costly in the long run.

Venture capital plays an important role in the financial industry. In this part, we will introduce the concept, the participants, the differences with the traditional financing and the process of venture capital.