Source Of Funding For Vcs

Most Venture capitalists get their money from various institutional and pension fund investors.They invest in several projects at a time. Most of them invest in large projects worth a few million.

Venture capitalists, like other investors, also go through a process of raising funds. They raise funds from foundations, endowment funds and retirement funds and then forward these funds into companies that they think will develop and make profit. Most Venture capitalists try to invest in several projects at a time to reduce their risk. Venture capitalists are usually very selective about the projects in which they invest as they look for big returns on their investments because they invest other people's money.

Venture capitalists are usually given stock options in the company they are funding as well as a right to choose one member on the Board of Directors. This is done to ensure maximum returns on their funding.

There are several different types of Venture capitalists: some of them like to concentrate on providing startup money for a new business venture; others prefer to invest in companies that have already succeeded and are undergoing the expansion period.

Venture capitalists are also reluctant about the business that they invest in: some Venture capitalists are considering only technology companies investing while others don't mind investing in varied companies.

Venture capitalists like to remain part of the equation in the operation of the company business. Some venture capitalists like to know about the other sources of company funding. Very often venture capitalists prefer long-term relations and if the business devepols according to the plan, it may receive several rounds of funding. However, business owners have to account for all the funding during the initial talks with Venture capitalists.

As Venture capitalists are investing the money of other people or institutions, they also like to become involved in the business, providing their experience and expertise in the industry. Business owners need to show a clear and credible business plan with an understandable vision that shows the possibility of the company making a profit if they are willing to obtain Venture capitalist funding.

26 April 2011
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