Venture Capital Funds
Professionally managed venture capital funds usually last for 10 years and passes through 4 stages of development that include providing seed investments, start-up, management and expansion finance, and leveraged buyout financing. Continue reading Venture Capital funds
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Venture Capital Investments
Most new and unquoted companies, in their early stages, fall short of sufficient capital and struggle to remain functional. They turn to capital investment support from outside investors until they can make profits. The demand for Venture Capital Investments has grown at an alarming rate in the last couple of years. more...
What is Venture Capital?
Simply, venture capital (also called VC or Venture) is capital investment or a type of private equity provided to young, high-potential growth businesses and companies by professional business investors. Usually, venture capital investments are made towards businesses involving high technology markets like information technology or communications, and ideally such companies that employ innovative business strategies and show promise of generating great profits, and securing good returns for venture capital investors. A venture capital investment is pivotal to a company in its early stages, and is generally provided as cash investments in exchange for company shares.
Who Can Apply for Venture Capital?
Venture capital is an attractive form of private equity for:
Companies with limited operating history
Companies too young or small to apply in capital markets
Companies without sufficient market recognition, expertise or value, unable to secure bank loans for business growth
Companies unable to complete their debt offering
Venture capital (VC) supports business growth through high-risk investments and aims for high returns on investment. Venture capital companies are formed as limited partnerships, limited liability partnerships, or limited liability companies. Investors who invest in a venture capital fund are known as LPs or limited partners. Investors funding start-up companies are known as general partners or venture capitalists. LPs contribute 99% of the capital fund, while venture capitalists contribute 1%. Returns on investment are distributed to partners in the same percentage as contributed.
Venture capitalists contribute their finances, also known as venture capital funds, to dedicated venture capital investment firms. Venture capital firms, holding funds from investors are organised as limited partnerships. The capital is reserved for investment in companies that promise high returns in five to seven years.