There are many terms which we consider as finance related terms and a laymen is generally not aware with the meaning of such terms. One such term is Venture Capital that refers to the capital offering in return of shareholding during the setting up and formulation of new & small business ventures specializing in innovative technologies or inventive ideas. It cannot be considered as the mere insertion and inoculation of funds into a new firm, rather it includes the continuous input of skills and ideas needed for profitable set up of the firm. Capitalists are also involved in designing its marketing strategy and for the strategic planning of the organization. It is a sort of association with consecutive stages of firm’s growth and development with idiosyncratic types of financing apt for each individual stage of development. Venture capital in India is a long-term risk capital to finance high technology projects which certainly involves risk but at the same time a also possesses strong potential for growth. Venture capitalists accumulate their resources including managerial skills for assisting new entrepreneur in the initial years of their business. They provide a new entrepreneur a kind of support system from all the possible aspects. Once this business venture arrives at the stage of productivity and profitability, they make their own profit by selling their equity holdings at elevated premium rates. In short, a venture capital company is the a financing establishment that associates with an entrepreneur as a co-promoter in his /her business project and shares both profits and losses of that enterprise. In the same context, an angel investor,also known as a business angel or informal investor, is helpful in supporting a new business venture. It can be defined as affluent individual supports a business startup by providing the required capital usually in return of convertible debtor ownership equity. There is a gradual increase in the number of angel investments who basically organize themselves into small angel networks and groups in order to share their research, pool the capital for investment and provide advice to the portfolio companies in which they have invested. Seed capital financing, sometimes known as seed funding, is a form of securities offering in which an investor purchases part of a business. This type of funding supports a business venture till the time it starts generating its own cash. It is a sort of initial capital given for starting a business. Entrepreneurship in India involves the deriving out the individual's talent in areas in which he / she hold the expertise and the capital & other significant requirements can be arranged from outside. It is the art and act of being an industrialist who undertakes innovation in introducing a new trend or a new type of business insight. Usually venture capital is the form of equity participation but sometimes it may be converted into a long term loan or convertible obligation in the long run. This completely depends on both the ;parties involved and all the decisions are taken with their mutual understanding. About Author: Vinay Kumar Ahuja joined The Hatch with 5 years’ marketing experience and worked on financing and capital division for some major angel investors. He has a passion for writing and penned most popular articles on business funding, virtual capital financing, entrepreneurship in country etc.
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