Venture Capital

Risk Capital Useful To Early Stage Business

Capital is basic thing to start any business or project and raising capital is one of the complicated tasks before any entrepreneur. You will find number of options for building capital in the market but to find proper option is major challenge. Venture capital is one of the best options to raise the capital or initial amount to start the business. Lot of companies rely on this type of capital because it is available easily. Venture capital offers long term capital, to assist unquoted growing companies and help them to start or expand their business. The nature of venture capital is different than loan because it is invested in terms of share or equity. Loan charges interest on investment irrespective of loss or profit of the business. Risk factor is high in case of venture capital because future returns are dependent on loss or profit of the business. If company will make profit you will get share not interest as well as if company sustain loss then you will not get any benefit. Future of the venture capital depends upon performance factor of business. But you will get higher returns in case of profit as compared to other types of investment. You will find lot of financial institutions which offer venture capital to early stage growing companies which have high potential.

Available For Long Terms

Now days most business start with public money instead of investing own capital. Hence a demand of venture capital is growing day by day in twenty first century. Though risk factor is high, still you will get your investment back in case of lose by selling business to others. To minimize risk factor most financial institutions provide venture capital for some specific period such as three years or five years. If you will not get satisfied with performance of company then you will get your investment back selling your share. Small business or medium size business is best options for investing venture capital to minimize risk factor as well as to get good returns. Heavy business requires huge capital to start as well as require lot of time for making profit. On the other hand small or medium size business starts with minimum capital and quickly makes the profits. Venture capital investors are always interested in company’s growth, hence go with minimum risk factor. Besides this business managing by experienced and ambitious management team is also favorite choice for venture capital investors. As well as venture capital investors also invest in entrepreneur business whether it is small or new, because of huge potential for growth and ability to implement business plans successfully.

Success Depends On Authentic Information

Venture capital investor carefully consider business proposal with its merits and drawbacks before investing. This process will take at least three to six months generally. Hence while applying for venture capital always make authentic information and minimize rejection factor up to great extend. Future success is depending upon quality of information provided and good for both investor as well as business entrepreneur. Venture capital investors strictly check history of entrepreneur and their market value. In the case of new business organisation, the factors such as the service or product viability play key role. Venture capital investors also consider that whether company has potential for growth in reality as well as ability of management team to execute business plan. Other criteria mostly considered by all venture capital investors is that does financial returns on the invested capital will meet their expectations because every investor wants to earn huge profit on his investment. Venture capital investors are very selective about investment and invest in that business which has exceptionally high growth potential with capability to provide returns on investment.

Easy To Find Investors By Following Basic Guidelines

Finding venture capital investors became very easy now days because all major financial institutions are in business. You will get detailed information about their terms and conditions from their official website. Before deciding any one venture capital investor always check its ability on investment, geographical location and preferences. Always take the help of experts from financial industry to find investor. Beside this contact venture capital investors through attorney, business broker, charted accountants and financial consultant for better negotiations. These personals have complete technical knowledge about transaction. As well as seek advice from business entrepreneurs who have already raised capital to find perfect venture capital investor. There previous experience will definitely help you to find out best venture capital investor. Make rounds of discussions with experts and investors team for getting best possible deal for your business. Always consider previous record of financial firm and their relations with their existing clients. To avoid future troubles and financial crises always go for reputed venture capital investor as well as go through every detail of investment proposal such as share of investor, period of investment and other hidden clauses which will create problems in future. Doing business with good partner also helps for growth of business.

Wide Opportunities For Investment

Venture capital investors normally like to invest in profit making businesses such as infrastructures, pharmaceuticals, automotive industry and other traditional business. Today many investors are going for other options also. Most venture capital investors prefer to invest in new service oriented businesses such as software, telecommunication, aviation industry and hospitality. These types of industry are flourishing in developing countries rapidly. Venture capital investors are looking for emerging markets with huge growth potential, hence giving first preference to them for investment. Venture capital investors invest in different types of share capital such as ordinary shares, preferred ordinary shares, preference shares and loan capital. All these share capital offers different returns. Venture capital investors like to invest in ordinary shares structure because of its simplicity and minimum risk factor. But returns on this type of investment are very low as compared to other structures. Investors are entitled for share in actual profit after deducting all expenses with ordinary share. Preferred ordinary shares or preference shares are entitled to fix share on profits to the venture capital investors. Besides this these type structures offer additional dividend for both profit and capital. Investors will get double income such as interest on capital as well as share in profit. Venture capital investment is like two side of coin and profitable to both invertors as well as business entrepreneur. This type of investment is need of today’s financial world and widely accepted worldwide.


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