An Insight into the Venture Capital Financing
Venture capital is basically a broad subcategory that comes under the purview of private equity catering to the total equity investments made in typically companies at nascent stage,so that the requirements of their launch,early development as well as the expansion of their business can be met with ease.Venture funding generally comes into picture when a need arises for the application of new technology, new products and new marketing concepts yet to be proven. And this is where Venture Giant caters to your requirements and you can sit and relax.
Venture capital can be sub classified at the development stage of a firm right from an early stage capital, for the commencement of start-up companies to the late stage and growth capital, for the funding in the expansion of existing business generating revenue, but which might not be profitable either or generating enough cash flow, for that matter,for the funding of future growth.Venture Giant offer unique opportunities to those entrepreneurs looking forward to developing products and their concepts that may be requiring significant capital during the seminal stages of the life cycles of their companies.If you seek sufficient funds in order to fund your projects, and are seeking financing outside,Venture Giant comes to your solution.
Venture Giant ensure that a venture capitalist is able to generate good returns in order to compensate for any risks involved in such investments making venture funding altogether an expensive affair for capital sourcing by companies.Venture capital suits the best to those entrepreneurs who seek large upfront capital which cannot be otherwise financed by other cheap alternatives,including debt.With venture funding facilitated by Venture Giant,you can use the venture capital for my traditional businesses apart from rapidly growing technology and biotechnology arenas.Portfolio companies in a VC fund can always benefit from the specific skill sets and managerial proficiency of the VC fund’s managers.
Whilst venture capitalists are generally careful in deciding where to invest in,Venture Giant ensures that a fund is invested in one out of the various hundred avenues available.Venture Giant makes certain that any venture chosen reaps exceptionally high growth potential with huge financial returns and a winning exit event within the necessary timeframe of 3-7 years as expected by the venture capitalists.For the investments are not liquid in nature and need 3-7 years for harvesting,venture capitalists are required to undergo detailed due diligence before making any investment.Venture capitalists are also required to take good care of the companies they invest in,such that the probability of reaching the IPO stage is enhanced at the time of favorable valuations.They usually assist at the following four stages of the development of a company:
1. Generation of Ideas
2. Start-up or commencement
3. Ramp up
Usually, six stages of financing are offered in venture capital that goes in sync with the stages of the development of the company,as stated above.The first stage comprises Seed Money,which refers to low level financing required for the inception of a new idea.The second stage is that of start-up, where early stage firms requiring funds for incurring expenses related to marketing and product development.The third stage comprises the first round of early sales and manufacturing funds.The second round wherein the working capital for early stage companies that are selling products without earning a profit.Third round, also known as Mezzanine financing,is the expansion money used fora newly lucrative company.Fourth round, also known as bridge financing,assists in financing the ‘going public’ process.
Private firms usually meet venture capital firms and other private equity investors in different ways,since their securities are not listed in public exchanges. This may include warm referrals received from the reliable sources of the investors and other business contacts, investor conferences and summits wherein companies meet and talk to investor groups directly in face-to-face meetings which include a variant called “Speed Venturing”and the follow-up meeting details are discussed. The need for lucrative returns make venture funding an expensive source of capital for firms and also quite suitable for those companies with large upfront capital requirements,which can otherwise not be funded by cheaper alternatives like debt.This is also commonly found in cases of intangible assets such as software and intellectual property with unproven value. And this is also the reason why venture capital is mostly prevalent in rapid technology and biotechnology fields.
Social Venture Capital is another known form of venture capital which provides capital money to firms which are deemed to be socially and environmentally in charge.Such investments basically provide good returns to investors in order to offer them solutions based on existing market situations vis-à-vis social and environmental concerns.