Why Venture Capital Is A Tool For Economic Development

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

Investors throughout the world, whether high-level or small, should have a voice in choosing the future, and they should be given the capability to support the entrepreneurs who will build that future.

Venture Capital is a specific term that refers to funding obtained from a venture capitalist. These are professional serial investors and may be individuals or part of a firm. Often venture capitalists have a niche based on business type and or size and or stage of growth. They are likely to see a lot of proposals in front of them (sometimes hundreds a month), be interested in a few, and invest in even fewer. Around 1-3% of all deals put to a venture capitalist get funded. So, with the numbers that low, you need to be clearly impressive.

Articles authored by Liam Brunt and Carlos, Key and Durpee showed how investment vehicles allowed capital to be moved to their most effective locations. By sharing risk, they promoted innovation and allowed for small ideas (the copper steam engine) to be turned into huge inventions. Currently, this is the same thing that is happening in India. According to the Economic Times, “The last three years have seen a significant expansion of the venture capital industry in India, as nearly a dozen funds raised billions of dollars to invest in local startups” (Gooptu). Money is pouring into Indian companies at a rapid rate which will allow the risk of these small companies to be shared among many investors, just like it was in the London coffee houses that laid the framework for the Industrial

Burrill, G. Steven, and Craig T. Norback. The Arthur Young Guide to Raising Venture Capital.

A partnership is a business organization where the partners own the business together and are

Venture Capitalists are a company or wealthy individual who is prepared to invest in a young or new business . Obtaining Venture Capitalist finance can be highly beneficial to a small business as it may be able to acquire a large amount of capital, of which would not have been possible through other methods of finance, such as a bank loan . Venture Capitalist investment is further financially viable as a business is not obligated to repay the investment it receives. This method of finance is based upon the investor’s decision to take a risk on a business in anticipation of its success. In addition to its financial beneficence, acquiring this form of capital can provide a small or new business with valuable business expertise, as investors are able to provide key advice and guidance as well as industry connections. Making better decisions can be vitally important for a business’ growth .

Since the economic crisis of 2008 and the collapse of financial institutions, entrepreneurs are clamoring for alternative financing choices and investors yearn for investment options with the potential for greater returns. With this in mind, the President and Congress enacted the Jumpstart Our Business Startups (JOBS) Act of 2012 to grow entrepreneurship and provide investors with opportunities to fund private companies in exchange for equity. The partners at Group Capital, a Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) registered broker-dealer, lamented that the options available for innovation are minimal until they discovered equity

Venture Capital is one of the fastest emerging sources of finance for new entrepreneurs. In spite of its increasing popularity, funding via Venture Capital is faced with a number of difficulties. Thus, it is important to study the various aspects of raising funds through Venture Capital.

Every business needs some form of capital investment hence the need for entrepreneurs to identify reliable sources of financing. The chameleon shoes venture, being a new business opportunity will require reliable sources of capital. In fact, the chameleon shoes business will require finances to purchase assets and for its working capital operations. As such, this paper seeks to explore various sources of capital with particular interest on venture capital as well as their pros and cons.

While in the process of determining companies to fund, Venture Capital firms examine some of these same characteristics on

Historically venture capital represented a small portion of alternative assets, which in turn represented a small, but sizeable, portion of the global financial asset base. (INSERT CITATION). Prior to the semiconductor boom in the 1960s, venture capital was closer to what today is described as angel investing. During this period, the majority of new venture financing originated from individual investors, and often financed by the entrepreneur or his or her family and acquaintances. (INSERT CITATION).

Venture capital typically comes from institutional investors and high net worth individuals and is pooled together by dedicated investment firms. A venture capitalist (also known as a VC) is a person or investment firm that makes venture investments, and these venture capitalists are expected to bring managerial and technical expertise as well as

One of the biggest challenges of many start-up companies is funding, more specifically the seed capital. Countless number of great ideas have been abandoned simply because the entrepreneurs were unable to obtain their seed money to kick off their project. With this new phenomenon of crowdfunding, brilliant ideas now have a platform to attain the necessary funding for them to be launched to the public. Kickstarter, one of the largest crowdfunding sites, currently covers US$237 million in funding pledges to over 40,000 projects (Mollick, 2014). This figure is only expected to rise in the coming years. However, this is not merely a one-time success; there has also been proof of the sustainable success of crowdfunding. Out of the fifty highest funded projects through 2013 on Kickstarter, 45 have turned into ongoing entrepreneurial firms (Mollick, 2014). New businesses now can have more alternatives other than the traditional sources of venture investment and financing.

investors exist for larger amounts of capital such as VC funds and banks, entrepreneurial initiatives that require much smaller amounts to start with need to rely on friends and family or own savings. They then also make extensive use of bootstrapping techniques to mitigate their financial constraints, by boosting their short-term profits.