| Venture Capital |
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The idea of venture capital flourished in 1980’s and spread through out the western world very successfully. Venture capital firms have played their part in the industrial revolution and this idea is safer for firms who do not want to be in loss at any cost. Venture capital works slightly different from the loan and interest system, if the firm goes bankrupt; even then the bank has the right to auction the property to secure their expenses but the bank does not share their profits, but the venture capital share the profits and they can get out of that business by selling their stake to someone else. Venture capital working is less risky and usually earns huge profits. The entrepreneurs or small business firms who come up with brilliant business ideas, products and need funding then contact the venture capital firms. They present their ideas to the investment firms and if the firm is impressed by their presentation, work plans and believes that this innovation will generate a lot of revenue, only then the investment firm known as venture capital invests in the new business. This investment money is used by the new firms to run promotional campaigns, consumer research and to keep a pace with their work plans. All the work force and ideas are thought and handled by the entrepreneurs but venture capital funding make it possible to launch it and handle the related arena. Investing in emerging new business is an easy and low risk option. The share in the new company are being owned by the venture capital firm and thus they own a major part of profits that are earned by the new company. Venture capital has established as a new industry and not only entrepreneurs and new business seek for investments rather already established businesses can be a potential source of investment for the venture capital firms. The new and novel product range by an already successfully established brand can earn a lot of profit for the investment firm, and if they feel the outcome is not up to their expectations, they can get out of it easily by selling their shares. Venture capital firm needs to do little research on their behalf to see if the product is promising enough to be successful in the market, what is the demand of that product and do they have the target consumers for the product. Venture capital is a huge industry and it is growing at a good pace, they are important for the society because they give progressive chance to talented and bright ideas which can make a difference. |