Venture Capital Financing
Venture capitalists have strict investment criteria and specialize in very specific high-growth industries. Venture capital is a broad term, meaning investment funds, partnerships, and divisions of large corporations whose focus is on investing in emerging and promising young companies.
Venture capitalists generally take preferred stock in a corporation in exchange for their investment, and typically expect to receive certain rights regarding their investment, including the right to elect one or more directors to the corporation's Board of Directors; the right to receive financial and other corporate reports and information; priority over common shareholders; and more.
Most companies seek to raise venture capital to support or stimulate economic growth. Other companies raise venture funding to establish credibility or to access resource networks which their venture capital partners have developed through years of experience. Certainly, venture capital financing is not a prerequisite for success.
Today's global business environment is increasingly competitive requiring decisiveness, broader relationship networks, abundant financial resources, and a global presence in order to compete effectively. The venture capital relationship can often bring that exact mix of support in addition to financial funding.
Venture capitalists generally hope to cash out in three to five years and rarely invest less than several million dollars at a time. Also in contrast with angel investors, venture capitalists often take an active role on the boards of companies in which they invest, which may result in loss of independence and control by the owners of those companies.
When a deal has been struck with venture capitalists, the terms of the venture capital investment are typically first memorialized in a Term Sheet, with full-blown legal documents subsequently embodied in a Stock Purchase Agreement. The Stock Purchase Agreement tends to be a fairly complicated document and is generally drafted by the venture capitalists' attorneys
Finding A Venture Capital Firm
The world of venture capital firms is very small. Once you are able to tap into that world, you should be able to find the firm that best suits your corporation's needs. You should start by asking your securities lawyer and accountant. You will want to speak with any colleagues who have experience working with a venture capital firm to raise money for their own ventures. There are publications and journals for venture capitalists that should be available in any public library. Another way to find a venture capital firm is to perform a web search on search engine .
For those companies which do not seek or are unable to attract venture funding, many alternatives exist:
1) Boot Strap
2) Angels
3) Private Placement
4) Initial Public Offering
Sources -
http://www.allbusiness.com/articles/content/585-25-1792.html
http://www.morebusiness.com/
Venture capitalists generally take preferred stock in a corporation in exchange for their investment, and typically expect to receive certain rights regarding their investment, including the right to elect one or more directors to the corporation's Board of Directors; the right to receive financial and other corporate reports and information; priority over common shareholders; and more.
Most companies seek to raise venture capital to support or stimulate economic growth. Other companies raise venture funding to establish credibility or to access resource networks which their venture capital partners have developed through years of experience. Certainly, venture capital financing is not a prerequisite for success.
Today's global business environment is increasingly competitive requiring decisiveness, broader relationship networks, abundant financial resources, and a global presence in order to compete effectively. The venture capital relationship can often bring that exact mix of support in addition to financial funding.
Venture capitalists generally hope to cash out in three to five years and rarely invest less than several million dollars at a time. Also in contrast with angel investors, venture capitalists often take an active role on the boards of companies in which they invest, which may result in loss of independence and control by the owners of those companies.
When a deal has been struck with venture capitalists, the terms of the venture capital investment are typically first memorialized in a Term Sheet, with full-blown legal documents subsequently embodied in a Stock Purchase Agreement. The Stock Purchase Agreement tends to be a fairly complicated document and is generally drafted by the venture capitalists' attorneys
Finding A Venture Capital Firm
The world of venture capital firms is very small. Once you are able to tap into that world, you should be able to find the firm that best suits your corporation's needs. You should start by asking your securities lawyer and accountant. You will want to speak with any colleagues who have experience working with a venture capital firm to raise money for their own ventures. There are publications and journals for venture capitalists that should be available in any public library. Another way to find a venture capital firm is to perform a web search on search engine .
For those companies which do not seek or are unable to attract venture funding, many alternatives exist:
1) Boot Strap
2) Angels
3) Private Placement
4) Initial Public Offering
Sources -
http://www.allbusiness.com/articles/content/585-25-1792.html
http://www.morebusiness.com/
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