Venture Capitalists - An Interesting Lot

Overview: The article talks on the various features of Venture Capitalists. Venture capitalists are people who raise money from other sources like banks, rich people with extra money, pension funds, mutual funds, etc., to create a venture capital fund. Once the venture capital fund is created, the venture capital fund managers who created it scour the planet for young companies, which currently lack money but have the potential to generate large profits in the future. VC funds almost always take a large portion of a firm's equity when they invest their money. But entrepreneurs are giving up more than just stock when they take VC money. Entrepreneurs who used to make decisions on their own suddenly have to call the VC fund managers whenever important company decisions are being made. The VC fund managers have to take some decisions regarding some crucial matters about the size of the market or the potential market and the market growth. After sizing up the company and its markets, the VC fund managers start taking a closer look at a company. And one of the first things they may do is value the company. When a company takes on a VC fund as a “partner," it must be understood that the fund managers will play a role in every significant business decision made after the investment.

(Is this item miscategorized? Does it need more tags? Let us know.)

Format: HTML | Date: Jan 2003 | Pages: 1