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Entrepreneurial Ecosystem (view source)
Revision as of 17:18, 9 November 2015
, 17:18, 9 November 2015→Venture Capital
==Venture Capital==
Venture capital firms provide “privately held “entrepreneurial” firms with equity, debt, or hybrid forms of financing, often in conjunction with managerial expertise” (Amit et. al, 1998). The typical VC investment will occur during early or middle stages of the startup process in exchange for a minority equity stake of the company, although most specialize in the investment of young entrepreneurial ventures. VC firms typically target startups in advanced technology sectors rather than service or low-tech businesses, and often specialize in a single vertical such as software or biotech.
A significant benefit of utilizing venture capital is access to large amounts of capital, although in exchange for a small portion of the ownership. Many startups need multiple waves of VC funding before developing enough to go public, or to be bought out by a larger company. The goal of a VC investment is to provide capital for a startup to gain success in order to make a financial return, consequently VC firms place heavy scrutiny and analysis on potential investments.
