Venture capital: what is it for?

Every entrepreneur should familiarize himself with such a concept as venture capital. It is a means invested in the fund of various companies with a view to expanding or improving them. Venture capital allows to significantly increase the value of the enterprise in the market, which can not but affect its prestige.

This way of financing business has significant advantages. For example, unlike bank loans, it is not necessary to return it and especially not to pay interest for using the loan. This, in turn, reduces the risk of bankruptcy of the organization in case of failure of the planned case. This type of investment places all responsibility strictly on the owners of the firm, and among all shareholders, the risk is distributed.

Of course, the capitalist, which carries out venture investment, does not remain without privileges. He owns a certain percentage of the profits, and also rewards as gratitude for helping to develop the core business. In practice, venture capital is often invested in the start-up fund of promising projects or directed to the expansion of successful and efficiently functioning organizations. Typically, the investment is carried out for a period of not less than five years.

Any provision of funds must be documented. Venture financing uses convertible securities, especially types such as stocks and bonds, debt receipts. The main task of the investor is to increase the available capital from him at the expense of long-term financing of enterprises. To achieve the main goal is directed to its activities, the essence of which lies in the competent choice of the object. Most capitalists investing venture capital do not plan to interfere in the affairs of the company and put forward their own ideas, although they are members of the board of directors. Their powers are limited to the financial support of the project.

For the investor, the most important moment is the moment of choosing a particular object of investment. After all, this is a long-term form of financing, and for a long-term cooperation and a strong alliance of the parties, it is necessary to fully trust the head of the enterprise. If the capitalist is fully confident that the management team will make every effort to achieve positive results, then he will not have any claims or additional questions. Ideally, the relationship of the entrepreneur and the investor should be respectful and open. At the same time, the head can honestly tell about existing problems or temporary difficulties, and freely discuss plans for the near future.

Before investing in a new company, you should carefully study the relationship of partners, the atmosphere in the team. It is very important to find out how strong the faith of all employees is in success, because it depends on how great is their incentive to work, and hence the success of the case. At the stage of establishment, the enterprise needs constant monitoring, therefore, the manager will have to spend a lot of time at work. That is why a competent investor before signing a cooperation agreement invites the owner's family to dinner to assess how harmonious the relationship between the spouses. Do not be surprised, this is indeed a very important factor affecting the effectiveness of the functioning of the control of the leadership apparatus.

Venture business in Russia is at the stage of formation. The government makes a lot of efforts to develop this direction. However, the level of distrust in long-term financing in our country is quite high, so it will be extremely difficult to convince the capitalists of the opposite.