Venture capital

Venture capital is a type of private equity capital typically provided by professional, outside investors to new, high-potential-growth companies in the interest of taking the company to an IPO. There are two basic financial market participant categories Investor vs See Investor AB for the Swedish investment company An investor is any party that makes an Investment. A hedge fund is a private Investment fund open to a limited range of investors which is permitted by regulators to undertake a wider range of activities than other investment In Finance, private equity is an Asset class consisting of equity Securities in operating companies that are not Publicly traded on Speculation, in a financial context is making an investment that increases the overall risk in a portfolio Institutional investors are organizations which pool large sums of money and invest those sums in companies A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money A building society is a financial institution owned by its members, that offers banking and other Financial services, especially mortgage lending A trust company is a Corporation, especially a Commercial bank, organized to perform the Fiduciary functions of trusts and agencies A collective investment scheme is a way of investing money with other people to participate in a wider range of investments than those feasible for most individual investors A credit union is a Cooperative Financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift providing credit Insurance, in Law and Economics, is a form of Risk management primarily used to hedge against the Risk of a contingent loss Investment banks profit from companies and governments by raising money through issuing and selling Securities in the Capital markets (both equity and A pension fund is a pool of assets forming an independent legal entity that are bought with the contributions to a Pension plan for the exclusive purpose of financing pension Prime brokerage is the generic name for a bundled package of services offered by Investment banks and securities firms to Hedge funds and other professional investors A trust company is a Corporation, especially a Commercial bank, organized to perform the Fiduciary functions of trusts and agencies The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated In Economics, a financial market is a mechanism that allows people to easily buy and sell ( Trade) financial Securities (such as stocks and bonds There are two basic financial market participant categories Investor vs Corporate finance is an area of Finance dealing with the financial decisions Corporations make and the tools and analysis used to make these decisions Personal finance is the application of the principles of Finance to the monetary decisions of an individual or family unit Public finance is a field of economics concerned with paying for collective or governmental activities and with the administration and design of those activities A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money Financial regulations are a form of Regulation or supervision which subjects Financial institutions to certain requirements restrictions and guidelines aiming to In Finance, private equity is an Asset class consisting of equity Securities in operating companies that are not Publicly traded on Initial public offering (IPO, also referred to simply as a "public offering" is when a company issues Common stock or shares to the public for the first Venture capital investments are generally made as cash in exchange for shares in the invested company. A venture capitalist (VC) is a person who makes such investments. A venture capital fund is a pooled investment vehicle (often an LLC or LP) that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans. A collective investment scheme is a way of investing money with other people to participate in a wider range of investments than those feasible for most individual investors A limited liability company (abbreviated LLC or LLC) in the law of the vast majority of the United States is a legal form of business Company A limited partnership is a form of Partnership similar to a General partnership, except that in addition to one or more general partners (GPs there are Financial capital is money used by Entrepreneurs and Businesses to buy what they need to make their products or provide their services The capital market is the Market for securities, where companies and Governments can raise longterm funds A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money A loan is a type of Debt. This article focuses exclusively on monetary loans although in practice any material object might be lent Venture capital can also include managerial and technical expertise. Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships. This form of raising capital is popular among new companies, or ventures, with limited operating history, who cannot raise funds through a debt issue. The downside for entrepreneurs is that venture capitalists usually get a say in company decisions, in addition to a portion of the equity.

History

Main article: History of private equity and venture capital

Beginnings of modern venture capital

The earliest origins of venture capital can be traced back to the medieval Islamic mudaraba partnership. The history of private equity and venture capital and the development of these Asset classes has occurred through a series of boom and bust cycles since the middle of the 20th In terms of protecting the entrepreneur, sharing the risks, losses and profits the two systems of finance are remarkably similar. ^[1]

General Georges Doriot is considered to be the father of the modern venture capital industry. Georges F Doriot (September 1899 – June 1987) was one of the first American Venture capitalists In 1946 he founded American Research and Development ^[2]

In 1946, Doriot co-founded American Research and Development Corporation (AR&DC) with Ralph Flanders, Karl Compton and others, the biggest success of which was Digital Equipment Corporation. American Research and Development Corporation was a Venture capital and Private equity firm founded in 1946 by Georges Doriot, the "father Ralph Edward Flanders (September 28 1880 – February 19 1970 was an American Mechanical engineer, Industrialist and Republican U Karl Taylor Compton ( September 14, 1887 &ndash June 22, 1954) was a prominent American Physicist and president of Digital Equipment Corporation was a pioneering American company in the Computer industry When Digital Equipment went public in 1968 it provided AR&DC with 101% annualized Return on Investment (ROI). In Finance, rate of return ( ROR) also known as return on investment ( ROI) rate of profit or sometimes just return, is AR&DC's $70,000 USD investment in Digital Corporation in 1957 grew in value to $355 million USD. ^[3] It is commonly accepted that the first venture-backed startup is Fairchild Semiconductor, funded in 1959 by Venrock Associates. Present day Fairchild Semiconductor International Inc is a spin-off company resulting from reconstitution of assets in National Semiconductor The year 1959 ( MCMLIX) was a Common year starting on Thursday (link will display full calendar of the Gregorian calendar. Venrock, a compound of "Venture" and "Rockefeller" is a pioneering Venture capital firm formed in 1969 to build upon the successful investing activities Venture capital investments, before World War II, were primarily the sphere of influence of wealthy individuals and families. World War II, or the Second World War, (often abbreviated WWII) was a global military conflict which involved a majority of the world's nations, including One of the first steps toward a professionally-managed venture capital industry was the passage of the Small Business Investment Act of 1958. The 1958 Act officially allowed the U. S. Small Business Administration (SBA) to license private "Small Business Investment Companies" (SBICs) to help the financing and management of the small entrepreneurial businesses in the United States. The Small Business Administration ( SBA) is a United States government agency that provides support to Small businesses. Passage of the Act addressed concerns raised in a Federal Reserve Board report to Congress that concluded that a major gap existed in the capital markets for long-term funding for growth-oriented small businesses. Facilitating the flow of capital through the economy up to the pioneering small concerns in order to stimulate the U. S. economy was and still is the main goal of the SBIC program today. ^[4]

Generally, venture capital is closely associated with technologically innovative ventures and mostly in the United States. ^[5] Due to structural restrictions imposed on American banks in the 1930s there was no private merchant banking industry in the United States, a situation that was quite exceptional in developed nations. The 1930s were described as an abrupt shift to more radical and conservative lifestyles as countries were struggling to find a solution to the Great Depression. In banking, a merchant bank is a financial institution primarily engaged in international finance and long-term loans for multinational corporations and governments The term developed country, or advanced country, is used to categorize countries with developed Economies in which the tertiary and quaternary sectors As late as the 1980s Lester Thurow, a noted economist, decried the inability of the USA's financial regulation framework to support any merchant bank other than one that is run by the United States Congress in the form of federally funded projects. The 1980s was the decade spanning from January 1 1980 to December 31 1989. Lester Carl Thurow (born 1938 is a former dean of the MIT Sloan School of Management and author of numerous bestsellers on economic topics An economist is an expert in the Social science of Economics. The United States Congress is the bicameral Legislature of the federal government of the United States of America, consisting of two houses These, he argued, were massive in scale, but also politically motivated, too focused on defense, housing and such specialized technologies as space exploration, agriculture, and aerospace. The arms industry is a global Industry and Business which Manufactures and sells Weapons and Military technology and equipment. History First orbital flights The first successful orbital launch was of the Soviet unmanned Sputnik Agriculture refers to the production of goods through the growing of plants and fungi and the raising of domesticated Animals The study of agriculture This article is about the field of research and industry for the corporation see The Aerospace Corporation Aerospace comprises the US investment banks were confined to handling large M&A transactions, the issue of equity and debt securities, and, often, the breakup of industrial concerns to access their pension fund surplus or sell off infrastructural capital for big gains. A security is a Fungible, Negotiable instrument representing financial value A pension fund is a pool of assets forming an independent legal entity that are bought with the contributions to a Pension plan for the exclusive purpose of financing pension Infrastructural capital refers to any physical Means of production or Means of protection beyond that which can be gathered or found directly in nature

Not only was the lax regulation of this situation very heavily criticized at the time, this industrial policy differed from that of other industrialized rivals—notably Germany and Japan—which at that time were gaining ground in automotive and consumer electronics markets globally. An industrial policy is any government regulation or law that encourages the ongoing operation of or investment in a particular industry Germany, officially the Federal Republic of Germany ( ˈbʊndəsʁepuˌbliːk ˈdɔʏtʃlant is a Country in Central Europe. For a topic outline on this subject see List of basic Japan topics. The automotive industry is the industry involved in the design development manufacture marketing and sale of Motor vehicles In 2007 more than 73 million motor vehicles Consumer electronics include electronic equipment intended for everyday use However, those nations were also becoming somewhat more dependent on central bank and elite academic judgment, rather than the more diffuse way that priorities were set by government and private investors in the United States. A central bank, reserve bank, or monetary authority is the entity responsible for the Monetary policy of a country or of a group of member states

Sand Hill Road in Menlo Park, California, where many Bay Area VC firms are based. Sand Hill Road is a Road in Menlo Park California, notable for the concentration of Venture capital companies there Menlo Park is an affluent City in San Mateo County, in the San Francisco Bay Area of California

The growth of Silicon Valley

Slow Growth in 1960s & early 1970s, and the First Boom Year in 1978

During the 1960s and 1970s, venture capital firms focused their investment activity primarily on starting and expanding companies. More often than not, these companies were exploiting breakthroughs in electronic, medical or data-processing technology. As a result, venture capital came to be almost synonymous with technology finance. Venture capital firms suffered a temporary downturn in 1974, when the stock market crashed and investors were naturally wary of this new kind of investment fund. 1978 was the first big year for venture capital, when the industry raised approximately $750,000.

Highs & Lows of the 1980s

In 1978, the US Labor Department reinterpreted ERISA legislation and thus enabled this major pool of pension fund money to invest in alternative assets classes such as venture capital firms. The Employee Retirement Income Security Act of 1974 ( ERISA) ( is an American federal statute that establishes minimum standards for pension plans in private [1]Venture capital financing took off. 1983 was the boom year - the stock market went through the roof and there were over 100 initial public offerings for the first time in U. S. history. That year was also the year that many of today's largest and most prominent VC firms were founded.

Due to the excess of IPOs and the inexperience of many venture capital fund managers, VC returns were very low through the 1980s. VC firms retrenched, working hard to make their portfolio companies successful. The work paid off and returns began climbing back up.

The dot com boom

The late 1990s were a boom time for the globally-renowned VC firms on Sand Hill Road in the San Francisco Bay Area. The 1990s collectively refers to the years between and including 1990 and 1999 Sand Hill Road is a Road in Menlo Park California, notable for the concentration of Venture capital companies there The San Francisco Bay Area, commonly known as the Bay Area, or the Bay, is a geographically and ethnically diverse metropolitan region that surrounds the A number of large IPOs had taken place, and access to "friends and family" shares was becoming a major determiner of who would benefit from any such IPO; Common investors would have had no chance to invest at the strike price in this stage. Initial public offering (IPO, also referred to simply as a "public offering" is when a company issues Common stock or shares to the public for the first In options, the strike price, or exercise price is a key variable in a derivatives contract between two parties

The NASDAQ crash and technology slump that started in March 2000 shook some VC funds significantly by the resulting disastrous losses from overvalued and non-performing startups. The NASDAQ (acronym of National Association of Securities Dealers Automated Quotations) is an American Stock exchange. 2000 ( MM) was a Leap year that started on Saturday of the Common Era, in accordance with the Gregorian calendar. By 2003 many firms were forced to write off companies they had funded just a few years earlier, and many funds were found "under water"; (the market value of their portfolio companies were less than the invested value) Venture capital investors sought to reduce the large commitments they had made to venture capital funds. Year 2003 ( MMIII) was a Common year starting on Wednesday of the Gregorian calendar. By mid-2003, the venture capital industry would shrivel to about half its 2001 capacity. Year 2003 ( MMIII) was a Common year starting on Wednesday of the Gregorian calendar. Nevertheless, PricewaterhouseCoopers' MoneyTree Survey shows that total venture capital investments hold steady at 2003 levels through the second quarter of 2005. The revival of an Internet-driven environment (thanks to deals such as eBay's purchase of Skype, the News Corporation's purchase of MySpace.com, and the very successful Google.com and Salesforce.com IPOs) have helped to revive the VC environment. The Internet is a global system of interconnected Computer networks eBay Inc is an American Internet company that manages eBaycom an Online auction and shopping Website in which people and businesses buy and Skype (skaɪp is Software that allows users to make telephone calls over the Internet. News Corporation (often abbreviated to News Corp) (,,) is one of the world's largest media conglomerate companies by Market capitalisation MySpace is a popular social networking Website offering an interactive user-submitted network of friends personal profiles blogs groups photos music and Google search is a Web search engine owned by Google Inc, and it is the most used search engine on the Web. Salesforcecom ( is a vendor of Customer Relationship Management (CRM solutions which it delivers using the Software as a service model Initial public offering (IPO, also referred to simply as a "public offering" is when a company issues Common stock or shares to the public for the first

Venture capital fund operations

Roles within a VC firm

Venture capital general partners (also known in this case as "venture capitalists" or "VCs") are the executives in the firm, in other words the investment professionals. Typical career backgrounds vary, but broadly speaking VCs come from either an operational or a finance background. VCs with an operational background tend to be former chief executives at firms similar to those which the partnership finances and other senior executives in technology companies. A chief executive officer ( CEO) or chief executive is typically the highest-ranking corporate officer ( executive) or administrator VCs with finance backgrounds come from investment banks, M&A firms, and other firms in the corporate investment and finance space.

Investors in venture capital funds are known as limited partners. A limited partnership is a form of Partnership similar to a General partnership, except that in addition to one or more general partners (GPs there are This constituency comprises both high net worth individuals and institutions with large amounts of available capital, such as state and private pension funds, university financial endowments, foundations, insurance companies, and pooled investment vehicles, called fund of funds or mutual funds. A pension fund is a pool of assets forming an independent legal entity that are bought with the contributions to a Pension plan for the exclusive purpose of financing pension A financial endowment is a Transfer of Money or Property donated to an Institution, usually with the stipulation that it be invested Insurance, in Law and Economics, is a form of Risk management primarily used to hedge against the Risk of a contingent loss A collective investment scheme is a way of investing money with other people to participate in a wider range of investments than those feasible for most individual investors A mutual fund is a professionally managed type of collective investments that pools money from many investors and Invests it in Stocks bonds,

Other positions at venture capital firms include venture partners and entrepreneur-in-residence (EIR). Venture partners "bring in deals" and receive income only on deals they work on (as opposed to general partners who receive income on all deals). EIRs are experts in a particular domain and perform due diligence on potential deals. Due Diligence is a term used for a number of concepts involving either the performance of an investigation of a business or person or the performance of an act with a certain Standard EIRs are engaged by VC firms temporarily (six to 18 months) and are expected to develop and pitch startup ideas to their host firm (although neither party is bound to work with each other). Some EIR's move on to roles such as Chief Technology Officer (CTO) at a portfolio company. According to the National Venture Capital Association the typical individual believes that a venture capitalist is a rich individual ready to invest in a new business venture, an investment into a "change-the-world" idea. On the contrary, the investors look for a high interest yielding opportunity.

The "associate" is the typical apprentice within a venture capital firm. After a few successful years, an associate may move up to the "senior associate" position. The next step from senior associate is "principal," typically a partner track position. Alternatively, there are many pre-MBA associate roles that are used solely for the purpose of dealsourcing, and the associate is usually expected to move on after two years.

Venture Capital may be a viable source of financing for a business. While they generally invest in businesses that are more established and ongoing, some do fund start-ups. In general they tend to invest in high-technology businesses such as research and development, electronics and computers. Venture Capitalists deal more in large sums of money, numbering into the millions of dollars, so they are generally well suited to businesses that are going grand from the start or have grown and require gigantic expansion.

Structure of the funds

Most venture capital funds have a fixed life of 10 years, with the possibility of a few years of extensions to allow for private companies still seeking liquidity. The investing cycle for most funds is generally three to five years, after which the focus is managing and making follow-on investments in an existing portfolio. This model was pioneered by successful funds in Silicon Valley through the 1980s to invest in technological trends broadly but only during their period of ascendance, and to cut exposure to management and marketing risks of any individual firm or its product. For the valley nicknamed "Silicone Valley" see San Fernando Valley. The 1980s was the decade spanning from January 1 1980 to December 31 1989.

In such a fund, the investors have a fixed commitment to the fund that is "called down" by the VCs over time as the fund makes its investments. There are substantial penalties for a Limited Partner (or investor) that fails to participate in a capital call.

Venture Capital Investing

As discussed in Private Equity Funds: Business Structure and Operations, venture capital investing involves the provision of capital to business enterprises in the early stages of the development of new products or services. Venture capital investing was especially prominent throughout the 1990s, with the boom and the subsequent collapse of speculative interest in computer and information technology, Internet and communications sectors. ^[6]

Compensation

In a typical venture capital fund, the general partners receive an annual management fee equal to 2% of the committed capital to the fund and 20% of the net profits (also known as "carried interest") of the fund; a so-called "two and 20" arrangement, comparable to the compensation arrangements for many hedge funds. A hedge fund is a private Investment fund open to a limited range of investors which is permitted by regulators to undertake a wider range of activities than other investment Strong Limited Partner interest in top-tier venture firms has led to a general trend toward terms more favorable to the venture partnership, and many groups now have carried interest of 25-30% on their funds. Because a fund may run out of capital prior to the end of its life, larger VCs usually have several overlapping funds at the same time; this lets the larger firm keep specialists in all stages of the development of firms almost constantly engaged. Smaller firms tend to thrive or fail with their initial industry contacts; by the time the fund cashes out, an entirely-new generation of technologies and people is ascending, whom the general partners may not know well, and so it is prudent to reassess and shift industries or personnel rather than attempt to simply invest more in the industry or people the partners already know.

Raising substantial venture capital

Venture capital is not generally suitable for all entrepreneurs. An entrepreneur is a person who has possession over a company enterprise, or Venture, and assumes significant accountability for the inherent risks and the outcome Venture capitalists are typically very selective in deciding what to invest in; as a rule of thumb, a fund may invest in as few as one in four hundred opportunities presented to it. A rule of thumb is a principle with broad application that is not intended to be strictly accurate or reliable for every situation Funds are most interested in ventures with exceptionally high growth potential, as only such opportunities are likely capable of providing the financial returns and successful exit event within the required timeframe (typically 3-7 years) that venture capitalists expect.

This need for high returns makes venture funding an expensive capital source for companies, and most suitable for businesses having large up-front capital requirements which cannot be financed by cheaper alternatives such as debt. That is most commonly the case for intangible assets such as software, and other intellectual property, whose value is unproven. In turn this explains why venture capital is most prevalent in the fast-growing technology and life sciences or biotechnology fields. High tech is Technology that is at the cutting edge —the most advanced technology currently available Foundations of modern biology There are five unifying principles Biotechnology is Technology based on Biology, especially when used in Agriculture, Food science, and Medicine.

If a company does have the qualities venture capitalists seek such as a solid business plan, a good management team, investment and passion from the founders, a good potential to exit the investment before the end of their funding cycle, and target minimum returns in excess of 40% per year, it will find it easier to raise venture capital.

Main alternatives to venture capital

Because of the strict requirements venture capitalists have for potential investments, many entrepreneurs seek initial funding from angel investors, who may be more willing to invest in highly speculative opportunities, or may have a prior relationship with the entrepreneur. An angel investor or angel (known as a business angel or informal investor in Europe) is an affluent individual who provides capital for a business

Furthermore, many venture capital firms will only seriously evaluate an investment in a start-up otherwise unknown to them if the company can prove at least some of its claims about the technology and/or market potential for its product or services. To achieve this, or even just to avoid the dilutive effects of receiving funding before such claims are proven, many start-ups seek to self-finance until they reach a point where they can credibly approach outside capital providers such as VCs or angels. This practice is called "bootstrapping". Financial bootstrapping is a term used to cover different methods for avoiding using the financial resources of external Investors Bootstrapping can be defined as “a collection

There has been some debate since the dot com boom that a "funding gap" has developed between the friends and family investments typically in the $0 to $250,000 range and the amounts that most Venture Capital Funds prefer to invest between $1 to $2MM. This funding gap may be accentuated by the fact that some successful Venture Capital funds have been drawn to raise ever-larger funds, requiring them to search for correspondingly larger investment opportunities. This 'gap' is often filled by angel investors as well as equity investment companies who specialize in investments in startups from the range of $250,000 to $1MM. An angel investor or angel (known as a business angel or informal investor in Europe) is an affluent individual who provides capital for a business The National Venture Capital association estimates that the latter now invest more than $30 billion a year in the USA in contrast to the $20 billion a year invested by organized Venture Capital funds.

In industries where assets can be securitized effectively because they reliably generate future revenue streams or have a good potential for resale in case of foreclosure, businesses may more cheaply be able to raise debt to finance their growth. Securitization is a Structured finance process which involves pooling and repackaging of Cash flow producing financial Assets Good examples would include asset-intensive extractive industries such as mining, or manufacturing industries. Offshore funding is provided via specialist venture capital trusts which seek to utilise securitization in structuring hybrid multi market transactions via an SPV (special purpose vehicle): a corporate entity that is designed solely for the purpose of the financing. A special purpose entity ( SPE) (sometimes especially in Europe " special purpose vehicle " or simply SPV) is a body corporate (usually a

In addition to traditional venture capital and angel networks, groups have emerged which allow groups of small investors or entrepreneurs themselves to compete in a privatized business plan competition where the group itself serves as the investor through a democratic process.

Venture Capital and Development

Venture capital can be used as a financial tool for development, within the range of small and medium enterprises (SME) finance, by playing a key role in business start-ups, existing small and medium enterprises and overall growth in developing economies. Small and medium enterprises (also SMEs, small and medium businesses, SMBs, and variations thereof are companies whose headcount or Venture capital acts most directly by being a source of job creation, facilitating access to finance for small and growing companies which otherwise would not qualify for receiving loans in a bank, and improving the corporate governance and accounting standards of the companies.

Venture capital is used as a tool for economic development in areas such as Latin America and the Caribbean.

Venture capitalists carry out very detailed due diligence and make 2-7 year investments. VCs also hand-hold and nurture the companies they invest in besides helping them reach IPO stage when valuations are favourable. Initial public offering (IPO, also referred to simply as a "public offering" is when a company issues Common stock or shares to the public for the first In Finance, valuation is the process of estimating the Market value of a financial Asset or Liability. VCs help entrepreneurs at four stages: idea generation, start-up, ramp-up and finally in the Exit, which is done through M&As. A business idea is a Concept which can be used for Commercial purposes A startup company or start-up is a Company with a limited operating history An exit strategy is a means of escaping one's current situation typically an unfavourable situation ^[7]

Geographical differences

US firms have traditionally been the biggest participants in venture deals, but non-US venture investment is growing.

United States

Venture capitalists invested some $6. 6 billion in 797 deals in U. S. during the third quarter of 2006, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association based on data by Thomson Financial.

A recent National Venture Capital Association survey found that majority (69%) of venture capitalists predict that VC investments in U. The National Venture Capital Association (NVCA is the leading trade association representing the Venture capital industry in the U S. will level between $20-29 billion in 2007.

Canada

Canadian technology companies have attracted interest from the global venture capital community in part as a result of a generous program of tax credits for scientific research and development (SR&ED). These tax credits are only available to Canadian controlled private companies (CCPCs). A CCPC must be incorporated in Canada. This creates a tension with many U. S. -based investors, since Canadian tax laws contain irritants that have historically made exits from Canadian companies difficult for U. S. -based venture capital investors.

Canada also has a fairly unique form of venture capital generation in its Labour Sponsored Venture Capital Corporations (LSVCC). A Labour Sponsored Venture Capital Corporation (LSVCC, known alternately as Labour Sponsored Investment Fund (LSIF or simply Retail Venture Capital These funds, also known as Retail Venture Capital or Labour Sponsored Investment Funds (LSIF), are generally sponsored by labor unions and offer tax breaks from government to encourage retail investors to purchase the funds. A tax break is a tax Saving. This includes Tax exemption, an exemption from all or certain Taxes of a state or nation in which part of Generally, these Retail Venture Capital funds only invest in companies where the majority of employees are in Canada. However, innovative structures have been developed to permit LSVCCs to direct in Canadian subsidiaries of corporations incorporated in jurisdictions outside of Canada.

Europe

Europe has a large and growing number of active venture firms. Capital raised in the region in 2005, including buy-out funds, exceeded €60mn, of which €12. A leveraged buyout (or LBO, or highly-leveraged transaction (HLT or "bootstrap" transaction occurs when a Financial sponsor acquires a controlling interest 6mn was specifically for venture investment. The European Venture Capital Association includes a list of active firms and other statistics. In 2006 the top three countries receiving the most venture capital investments were the United Kingdom (515 minority stakes sold for €1. 78bn), France (195 deals worth €875m), and Germany (207 deals worth €428m) according to data gathered by Library House. The Library House Ltd (Library House is a business information and consulting company based in Cambridge, England, founded in 2002 by Doug Richard ^[8]

European venture capital investment in the second quarter of 2007 rose 5% to 1. 14 billion euros from the first quarter. However, due to bigger sized deals in early stage investments, the number of deals was down 20% to 213. The second quarter venture capital investment results were significant in terms of early-round investment, where as much as 600 million euros (about 42. 8% of the total capital) were invested in 126 early round deals (which comprised more than half of the total number of deals). ^[9]

India

The investment of capitalists in Indian industries in the first half of 2006 is $3 billion and is expected to reach $6. 5 billion at the end of the year.

Venture Capital Fund
The Reserve Bank of India, in regard to foreign exchange management act, frames the policy. The Reserve Bank of India (RBI भारतीय रिज़र्व बैंक is the Central bank of India, and was established on April The regulations of RBI for venture capital funds are that a SEBI registered venture capital fund investor can invest with the general permission of the RBI into Venture Capital Fund or Indian venture capital undertakings, according to the rules and regulations as specified by RBI notifications from time to time. In income-tax act 1962 venture capital fund consider as a pass through entity & not taxed , but income from this is taxed in investers hand

China

In China, venture funding more than doubled from $420,000 in 2002 to almost $1 million in 2003. For the first half of 2004, venture capital investment rose 32% from 2003. By 2005, led by a wave of successful IPOs on the NASDAQ and revised government regulations, China-dedicated funds raised US$4 million in committed capital.

Vietnam

In Vietnam, venture funding has been increasing rapidly as Vietnamese overseas returnees and Vietnamese ex-managers of multinational companies increasingly establish new companies with ambitious growth plans. Firms such as Mekong Ventures, IDG Vietnam Ventures and DFJ-VinaCapital have pioneered investments in seed-stage and start-up stage companies in Vietnam. The $20 Million Challenge is Vietnam's first business plan contest for local entrepreneurs.

Popular Culture

Robert von Goeben and Kathryn Siegler produced a comic strip called The VC between the years 1997-2000 that parodied the industry, often by showing humorous exchanges between VCs and entrepreneurs. ^[10] Von Goeben was a partner in Redleaf Venture Management when he began writing the strip. ^[11]

Mark Coggins' 2002 novel Vulture Capital features a VC protagonist who investigates the disappearance of the chief scientist in a biotech firm in which he has invested. Coggins also worked in the industry and was co-founder of a dot-com startup. ^[12]

Drawing on his experience as reporter covering technology for the New York Times, Matt Richtel produced the 2007 novel Hooked, in which the actions of the main character's deceased girlfriend, a Silicon Valley venture capitalist, play a key role in the plot. Matt Richtel writes the syndicated comic Rudy Park under the Penname Theron Heir ^[13]

References

^ Murat Cizakca, A Comparative Evolution of Business Partnerships (Leiden: Brill, 1996), ch. The history of private equity and venture capital and the development of these Asset classes has occurred through a series of boom and bust cycles since the middle of the 20th An angel investor or angel (known as a business angel or informal investor in Europe) is an affluent individual who provides capital for a business Business valuation is a process and a set of procedures used to estimate the economic value of an owner’s interest in a business Corporate finance is an area of Finance dealing with the financial decisions Corporations make and the tools and analysis used to make these decisions Dragons' Den is a venture-capitalist Television programme that originated in Japan where the format is owned by Sony. Global asset allocation or Global assets under management consists of Pension funds, Insurance companies and Mutual funds. Investment banks profit from companies and governments by raising money through issuing and selling Securities in the Capital markets (both equity and Initial public offering (IPO, also referred to simply as a "public offering" is when a company issues Common stock or shares to the public for the first A Labour Sponsored Venture Capital Corporation (LSVCC, known alternately as Labour Sponsored Investment Fund (LSIF or simply Retail Venture Capital Topics in Finance include Fundamental financial concepts Finance an overview Arbitrage Below is a list of notable Venture capital firms The following is a ranking of the largest Private equity firms The ranking was compiled by Private Equity International, which reveals that the world's 50 largest private equity The National Venture Capital Association (NVCA is the leading trade association representing the Venture capital industry in the U In Finance, private equity is an Asset class consisting of equity Securities in operating companies that are not Publicly traded on In finance the private equity secondary market (also often called private equity secondaries or secondaries) refers to the buying and selling of pre-existing investor A seed round, sometimes known as a friends and family round or seed funding, is a Securities offering whereby one or more parties that have some connection Social venture capital is a form of Venture capital investing that provides capital to businesses deemed socially and environmentally responsible Factoring is a word often misused synonymously with accounts receivable financing. 2.
^ WGBH Public Broadcasting Service, “Who made America?"-George Doriot”
^ Joseph W. Bartlett, "What Is Venture Capital?"
^ Small Business Administration website on SBIC.
^ Venture Capital Industry Overview presentation for 1Q07, Dowjownes VentureSource based on data from Dow Jones VentureOne/Ernst&Young
^ James M. Schell, Private Equity Funds: Business Structure and Operations, (Law Journal Press 1999, updated as needed). ALM (formerly American Lawyer Media) is an Integrated media company focusing on legal and Real estate subjects ISBN 9781588520883
^ Investment philosophy of VCs
^ Financial Times Article based on data published by Library House
^ European Venture Capital, by Sethi, Arjun Sep 2007, accessed December 30, 2007. Arjun Charan Sethi (born 18 September, 1941) is a member of the 14th Lok Sabha of India.
^ The VC Comic Strip
^ San Francisco Chronicle, “Comic Book Pokes Fun at Venture Capitalists"
^ Salon.com, “How Greedy Was My Valley?”
^ National Public Radio, “Love, Loss and Digital-Age Deception in Hooked”

External links

Venture Capital Glossary
Ricafe2 - A Research programme sponsored by the European Commission analysing venture capital.

Dictionary

-noun

(business) money invested in an innovative enterprise in which both the potential for profit and the risk of loss are considerable.

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