Venture capital asserts a corporate or private investment made into early-stage or start-up companies. The funding companies buy the shares of the emerging business and turn into a financial partner. It is an exchange of an equity stake rather than a loan. The investment occurs through angel investors, equity crowdfunding, and other seed fundings. The venture capitalists are often the co-owners in the portfolio companies and provide support in the interest of profiting through initial public offerings or trade sale of the VC firms. Venture funding is pooled together and subsists widely in biotech and software industries.
Features of Venture Capital funds
- High degrees of risk - the financial investment is accompanied by high risks with stage companies' failure.
- Lack of liquidity
- Equity participation
- Long term investment - long horizon to encash the funding.
