The companies that offer new ideas and technology in various fields are examples of these new ventures.These upcoming companies that have a fresh product or service to offer are highly risky due to lack of experience in their chosen industry. The financial growth of these companies is the reason why a venture capitalist would want to invest in them. The investors are not involved in the everyday transactions of the venture but are monitoring how the business is progressing. Not unless the business life has come to end, the investment is usually not yet returned to the investor which is on several occasions through a preferred stock.
Essentially, the process for venture capital investment is all about maximizing rewards while minimizing risks. The partners should have access to a number of venture capitalists in order for them to gain exposure. The business owners should prepare a detailed feasibility report on the Technical, Financial, Managerial, Marketing and Socio-economic stating the characteristics of the service or product.
For most Venture Capital Funds, a span of not more than 5 years is the investing cycle, after which, investments are focused on expansions and managing the company?s portfolio.On most occasions, the business owners who run the new venture are the reason why an investor would want to put in money for the company. In addition to that, making a bond or relationship with capital investors are a vital component for the business owners.
The second step in the process is the preliminary evaluation. A thought out review of the report from the business owner is done to ensure it reliability. Following the preliminary evaluation is to make a well made approval report and an analysis for the risk and benefits of the new venture. The new business must obtain the customer?s needs and wants with regards to the product or service they are selling.
Venture capital firms should anticipate this by diversifying or spreading their investments and hope that their successful investments recompense for the losses.An official union is made between the capitalist and the business owners to ensure their duties and responsibilities. The last process of venture capital investment would be monitoring the project and on some occasions make post investment support to the new business. This would ensure the continuity of the project to build its momentum to greater heights.
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Source: http://business-finance.jeyamarticle.com/venture-capital-investment/
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