This paper discusses venture capital (VC), a form of equity finance, which developed in the post World War II years.
Written in 2004; 6,470 words; 17 sources; MLA; $ 149.95
Paper Summary:
This paper discusses that professional venture capital firms are closely held corporations or private partnerships funded by public and private pension funds, endowment funds, corporations, wealthy individuals and foreign investors; they invest venture capital in both start-ups and established companies, thereby, leveling out their risks and ensuring a net positive return. The author points out an attractive feature of VC is that it provides the opportunity for investors to aim for very high returns, which no other financial instrument can provide. The paper relates that, while the debate continues as to whether VC really is the driver for industrial development, it is widely accepted that VC is a key tool in furthering three major economic objectives, namely, transfer, widen industrial base, and assistance in setting up of new businesses.
Table of Contents
Introduction
Definition of Venture Capital
Legal Status of VC Firms
Evolution of Venture Capital in the U.S.
Venture Capital Trends in the U.S.
Venture Capital in the Europe
United Kingdom
Canada
Australia
China
Impact of Venture Capital Financing on Economic Performance
Successful VC Backed Companies
Conclusion
From the Paper:
"As the firm expands, it may need more capital, which is provided by second round finance. When the firm reaches breakeven point or has already started making small profits, it will need funding for expansion of the business. This critical requirement in met by expansion capital, which drives the firm to maximize profits. Management buy out is the finance granted to the firm's management and investors to acquire an existing product line or business. As opposed to this is the Management buy-ins where funds are provided to managers outside the firm to buy into the firm with the support of venture capital investors. Finally, mezzanine financing is supplied to the firm to enable it to complete a trade sale or go in for public floatation of the firm's shares."
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