Before knowing about venture capital funds it is better to understand firstly the meaning of venture capital. Meaning of venture capital is different to many different people. The definition of venture capital fund is broad because many people are involved in the business of funds and all of them have huge expectations.
Venture capital is a method of business funding for companies who are looking to grow beyond normal rates of business growth. It is the money which acts a fuel for the growth of the business. It is a form of equity investment where the investors who give the money also get partial ownership of the company through shares and some sort of control.
Venture capital financing is the way by which you could raise money for starting your small business. There are two broad sources of finance equity and debt.
Equity means money brought in by the owners and debt means money is obtained by the investors i.e. you have to pay the interest as well as the amount to the lenders. Before giving funds, lenders look at the capability of the borrower to pay the interest and the loan amount by looking at the quantum of equity investment. They know that without adequate equity, when a business go bankrupt then they would loose money they have lent. So business must show reasonable equity financing.
Venture capital can also be a source of equity funds. The advantage of venture funds is that you have not to pay the interest from the start because venture capitalist can wait for a reasonable period of time so that business could establish and reap good profits.
Venture capitalists can earn their money by selling the company's stock in the stock market when the price is high. So you have to just pay the dividends to shareholders not the money which you borrowed from the lender.
Venture capitalists invest in the business which have the experience of 5 to 10 yrs because it helps in assessing the management strength of the business from the performance record during the past. So a new businessman could not hope to venture funds because they don't have any performance records to show.
The main objective of venture capitalist is to earn money either through the dividends from the business or by selling their stocks at high prices in the stock market.
Before signing the letter of content few things you need to take into consideration: Firstly check the current business situation and decide whether the venture capital financing is the wisest choice for your company. Secondly, you have to loose unnecessary shares to venture capital firm.
Besides the timing of venture capital financing you have to research on venture capital companies that which company provides the best contacts, customers, and knowledge.
This fund has been set up to provide investment for the community enterprises, so that we can accelerate their growth for long-term community renewal. These funds also finance the technical support services to build the community enterprises and strengthen their delivery capacity and long-term viability.
If you are looking for a venture capital firm then it is important to understand that all firms offer different things to different companies. As venture capital firms vary from one another so you have to understand which firm has which specialization. In fact more time you waste in sending your business plan to various capital firms the less time you focus on the firms that want you to look at your business plan. So, it is better to do a research on venture capital firms that you wish to target before you send out your first funding request.
The venture capital firms listed below have driven the economy to new heights: Acacia, Benchmark Capital, Battery Ventures, Kleiner Perkins, Chase Capital, CMGI, Draper Fisher Jurvetson, Sequoia Capital, Sevin Rosen, Softbank, and TL Ventures.
Hedge funds are the investment pools which are located outside the mainland for tax and regulatory reasons. The managers known as Hedge fund managers are normally paid on a fee-for-performance basis. These people use many techniques to hike returns. Nowadays, more and more people are investing in hedge funds. This interesting investment can make people a lot of money. In comparison to other investments hedge funds have a lot of risk. Like mutual funds they don't have the same mechanisms to protect the investors. Inspite of having few protections people have not stopped in investing in hedge funds.
Following are the features of hedge funds:
There are three main classes of hedge funds:
A closed-end fund also known as closed end company that sell shares like any other corporation and usually does not redeem its shares. This is established by selling a fixed number of shares to investors. Then these funds are traded on the stock exchange. The money is invested and managed by a professional portfolio manager. The funds share price can deviate from the net asset value depending on the investor demand for the fund itself.
Some of the basic characteristics of closed-end funds are:
Closed-end funds are available in many varieties. They can have different investment objectives, strategies and investment portfolios. They can also be subject to different risks, fees and expenses.
Besides its characteristics, closed-end funds have many advantages and disadvantages.