Venture Capital Brokers & Financing
Today to have money is just not enough. It must be invested properly as money on its own loses value over time due to factors like inflation and devaluation of currency. There are several ways to ensure growth of wealth and venture capital is one of them. This is a high-risk/high-return investment where institutional investors pool resources in collaboration with high profile individuals. The capital typically comes from institutional investors and high net worth individuals, pooled together by dedicated investment firms.
Wealthy individuals may not have the necessary expertise to manage their wealth efficiently. By pooling resources, the combined wealth of several individuals is infinitely more advantageous and the risk also gets distributed. Venture capital firms are small groups of experts with a wide knowledge of business administration and industrial technology. These firms locate and control companies. They add skills and inject capital, achieving an optimal return in a short period of time.
More ambitious projects use “Angel Investors” - private investors who use their own capital to finance the project.
There are five stages to venture capital financing:
1. The Seed stage: This is the conceptualization stage wherein the idea is put forth but the product or service may not be clearly defined. It is a stage of research, patent application market research and contract formation
2. The Start-up stage: At this stage the project is partially operational but the search is on for a complete management team. It is at this stage where some early investors appear.
3. The Second stage: The project has now begun to take the shape of a commercially viable entity. Sales shoot up. The company increases inventory. Funding is used for marketing expenses and expansion
4. The Third stage: By now, peak performance is reached. Statistics are looking good at all levels and recruiting is at an all-time high. There is a good rapport with customers and the company now is publicly well-known.
5. The Bridge/Pre-public stage: Finally the company has a proven track record and its bankers are ready to make it go public in six months time. This is a stage of cleaning up of the records to clear any outstanding debts, loans etc, and polishing up the image in general to present an impressive picture in public.
Listed below are three of some of the most prominent venture capital finance companies in the world:
1.Barclays Wealth: A company more than 300 years old, Barclays is one of the most respected and largest financial institutions in the world, with offices in more than 50 countries. Barclays has over 49 million customers worldwide. The group had £151.3 billion client assets across the world in December 2009.
2. PricewaterhouseCoopers: PricewaterhouseCoopers is a well known name globally. This company was founded in 1998 as a result of a merger between two companies – Price Waterhouse and Coopers & Lybrand. The roots go further to a much earlier date in 1865 when an accountant by the name of Samuel Lowell Price became partners with two others – Edwin Waterhouse and William Hopkins Holyland. The firm was renamed as “Price, Waterhouse” when Holyland left.
3. Siemens Venture Capital: Based in Munich, Germany, Siemens Venture Capital has offices worldwide. Their focus is on growth segments in the energy, industry and healthcare sectors.
We can conclude that the basic philosophy of venture capital financing is all about money being collected from those who have it by experts who know what to do with it. The result is an exponential growth of wealth. This is a very important requirement for the economic health of any progress-oriented economy.
