Finance series Financial market Participants Corporate finance Personal finance Public finance Banks and Banking Financial regulation
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History of private equity and venture capital
Early History
The 1980s
The 1990s
The 21st Century
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Venture capital is a type of private equity capital typically provided to early-stage high-potential growth companies in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company. Venture capital investments are generally made as cash in exchange for shares in the invested company.
Venture capital typically comes from institutional investors and high net worth individuals and is pooled together by dedicated investment firms.
A venture capitalist is a person or investment firm that makes venture investments and these venture capitalists are expected to bring managerial and technical expertise as well as capital to their investments. A venture capital fund refers to a pooled investment vehicle that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans.
Venture capital is most attractive for new companies with limited operating history that are too small to raise capital in the public markets and are too immature to secure a bank loan or complete a debt offering. In exchange for the high risk that venture capitalists assume by investing in smaller and less mature companies venture capitalists usually get significant control over company decisions in addition to a significant portion of the companys ownership .
