VENTURE CAPITAL (VC)
A Venture capital is a private financial company that provides funding opportunities to high-growth start-ups. These start-ups may be at an early stage or at a later stage of development. Usually, venture capitalists are focusing on high-growth industries like the internet industry.
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The funding choice of venture capital is ideal for new companies that are dynamic but too small in order to raise funds in the capital markets
Venture Capital Roles
Important roles in a Venture Capital except for the management include:
- Venture Capital Management (they get paid by investors and receive an annual fee of 1-2% of the total capital plus a performance incentive of 10-20% of the venture capital profits)
- Venture Partners — (they are employees tracking potential investment opportunities)
- Principal — (they are experienced employees in a particular field like investment banking or business consulting)
- Associate — (below principal, it is an apprentice position)
- Entrepreneur-in-Residence (the EIR are experts in performing due diligence on particular types of industries)
How a Venture Capital Chooses Partnerships
Venture capital is focusing on a business model, management, innovation, technology, projected growth, and projected cash flows. Venture capital does not focus on projected dividends as venture capitals usually sell their equity before a company enters the dividend period. The common timeframe of venture capital is from 3 to 7 years. Venture capitalists carry out precise due diligence before they enter a company’s share capital and they give extra weight to the past consistency of the company’s management.
5-Stages of Business Development
There are 5 main stages of business development:
- Business Idea
- Start-up Foundation
- VC Entrance
- Start-up Expansion
- VC Exit
Our Tips for Creating a Business Plan to Fund your Start-up
A solid business plan should consist of a brief analysis of the industry and the business model, a brief presentation of the proven experience of the management team, high projected growth, and cash-flows analysis for at least 5 years ahead. The average projected IRR (internal rate of return), should be at least 30%. Don’t try to promise to deliver things you will not able to justify. Be precise and accurate, especially as concerns the fixed cost, and in order to project future growth use at least 3 different scenarios. Here are some good tips for the ideal business plan:
1) Describe briefly the growth opportunities of the industry by giving weight to future technological developments
2) Describe how the management team has the experience and the capabilities to serve that industry better than the competition already does.
3) Present at least 3 scenarios describing future growth (basic scenario, unfavorable scenario, and optimistic scenario)
4) Cost analysis: Divide Cost into Fixed and Variable and evaluate the Cost Per Unit and the Marginal Cost
5) Make a reliable cash flow analysis for 5-10 years ahead.
Major Global Venture Capitals List
1) 3i Venture capital, Visit 3i
2) Accel Partners Venture capital, Visit Accel Partners
3) Advanced Technology Ventures, Visit Advanced Technology
4) Alta Communications Venture capital
5) Alta Partners Venture capital, Visit Alta Partners
6) American Research and Development Corporation
7) Ardesta Venture capital, Ardesta at Bloomberg
8) Atlas Venture Capital, Visit Atlas VC
9) Austin Ventures, Visit Austin Ventures
10) Azione Venture Capital, Visit
11) Battery Ventures, Visit Battery Ventures
12) Benchmark Venture Capital, Visit Benchmark
13) Bessemer Venture Partners, Visit Bessemer Venture Partners
14) Bootup Labs, Inc
15) Brentwood Associates, Visit Brentwood Associates
16) Burr Egan, Deleage & Co. Venture capital
17) Canaan Partners Venture capital, Visit Canaan Partners
18) Carmel Ventures, Visit Carmel Ventures
19) Charles River Ventures, Information
20) Clearstone Venture Partners, Visit Clearstone Venture Partners
Here are some good Venture Capitals for US Early-Stage Companies :
Columbia |
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Menlo Park |
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Philadelphia |
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Pittsburgh |
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Baltimore |
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Bethlehem |
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West Conshohocken |
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Menlo Park |
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Menlo Park |
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Princeton |
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Cambridge |
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Santa Clara |
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Williamstown |
Here are some good Venture Capitals for US Later-Stage Companies :
New Orleans |
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New York |
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Lawrenceville |
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Westport |
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Santa Monica |
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New York |
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Waltham |
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Menlo Park |
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Menlo Park |
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Palo Alto |
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Menlo Park |
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Palo Alto |
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Menlo Park |
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Philadelphia |
□ Venture Capitals
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