Venture Capital . . .
is money invested in a business at high
risk to the investor, usually when the company is
unable to secure needed funds from traditional lending sources, such
as commercial banks or factors. Usually, the status of the company
is such that the investor will be unable to withdraw his money in the
near future. Venture capital can be invested through the purchase of
stock (equity), by making a loan (debt), or through a combination of
the two. Often, venture capital investments come bundled with
management assistance and oversight by the investor, known as value
Venture capital investors require a very high rate of
return and thus only invest in companies with good prospects for rapid
growth. Companies most likely to obtain venture capital are those that
promise to appreciate quickly and which envision a public offering or
company sale in five years or less. Turnarounds and leveraged buyouts
are also good prospects for venture capital.
Development Corporations), CDCs (Community Development
Corporations), Corporate Venture Capital,
Companies, LBO (Leveraged Buyout),
ROI (Return on Investment),
Business Investment Companies),
Added, Vulture Capitalists.