Venture Capital is an interesting point to make about different ways in order to gain capital in order to start up a company. However, it is a very risky way to gain capital and it totally depends on the business model and success of the company. Most small business that receive venture capital are high risk, high potential start up companies that can either make a large amount of money or completely flop. The financial capital is given out by venture capital funds which receives equity in the company that it invests in in return. This is how the fund makes money and also how the current economy becomes stimulated. These small businesses can turn into multi-billion dollar corporations with thousands of employees.
The hardest part to fathom about Venture Capitol is that it is only given out to around 600-800 new companies a year. Factor in the data that around 2 million businesses are started every year and it seems as though it is impossible to receive venture capital for a small business. However, it is possible if this small business is going in the right direction and has the right mindset. Most of the companies that receive venture capitol are ones in biotechnology, IT and software. This is because these companies can breakthrough with new technology and make huge profits in a crowded market.
A small business does have to worry about the amount of the business it has to give up in order to receive the capitol. Since the investors are investing in it when it is nearly brand new they can get a large portion of the control in the business. This may come back to haunt the creator of the business if it does extremely well. It is a risk that may be one of the toughest decisions a business owner has to make. Even having the ability to accept or deny Venture Capitol in the first place is a huge step in the right direction and it means something is going right.
Follow the latest stories of venture capital topics from David Hand Crescent Point Asia or get more Crescent Point Venture Capital news, the leading emerging markets investment management and financial advisory firm primarily targeting in the Asia-Pacific and Middle East regions.
This video discussed the relationships, decisions, and economics that drive venture capital.
Source: http://www.company-registration.sg/blog/index.php/2012/08/venture-capital-for-small-business/
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