Venture Capital
Transcript: - Ontario Venture Capital Fund is a good example: government managed fund that provides money to firms that invest in strong start up companies - Large venture capital firms invest in high potential start up companies - Dragon's Den is an example of a method of finding financing through venture capital: panel of venture capitalists/entrepreneurs are pitched potential start up ideas http://www.thebusinessangel.org/difference-businessangel-venturecapital.html http://www.entrepreneurship.org/emed/pros-and-cons-of-venture-and-angel-investing.aspx http://www.entrepreneur.com/article/242702 http://ovcf.com/ http://mashable.com/2013/05/06/startup-venture-capital/ Venture Capital in Business What is 'venture capital'? Works Cited Ashley Cadoret Difference Between Angel Investors & Venture Capitalists 1. Unique idea with high barriers to entry 2. Develop a compelling value proposition 3. Demonstrate market traction 4. Assemble the perfect team Best Tips on How to get Venture Capitalists Interested in your Startup - Andreessen Horowitz - $1,020,000,000 invested in USA (consumer products, software) - Khosla Ventures - $809,000,000 invested in China/USA (software) - SV Angel - $736,000,000 invested in Silicon Valley, NYC, San Francisco (commercial services, software) - Accel Partners - $721,000,000 invested in Europe & USA (communications, networking, healthcare technology, media) - NEA - $690,000,000 invested in Asia, Brazil, USA (energy services, IT services, pharmaceuticals, biotechnology, software) - Venture capitalists' investments are usually larger - Angel investors are not as heavily involved with management, while venture capitalists can take on management roles - Angel investors are individuals with their own successful business endeavors and have contacts for start up companies - Both invest to get high rates of return Venture Capital: Capital invested in a project in which there is a substantial element of risk, typically in a new or expanding business. These new or expanding businesses are thought of to have great potential by investors, and they see a positive long term future for the companies. Definition Pros and Cons of Venture Capital - Large investments made by firms: typically between $500,000 and $5,000,000 - Provide great resources: consultants, management, etc. - Want the best for the companies to ensure success and high rates of return on investment - Contacts and connections through venture capitalists can be made, potentially more investments in good start up companies Cons End Venture Capital Top Venture Capital Firms (2014) Examples: - Stress the important aspects of your business, such as customer service - Have a business that will "fill a void in the market." - Perfect team = best first impression - Companies may not produce a big return on investment, VC firms may expect large returns on their investments - Timeline may be extensive before an official investment is made - Many individuals and companies will make the investment for partial ownership in the company, may ask for controlling majority (51% of the company) Where to get Venture Capital - Typically wealthy investors are involved primarily in the transaction - The return the investors get depends on the success on the business - High risk associated with investing money into a new business; with internal and external threats potentially harming the company and losing money - Many Venture Capital Firms invest money, which becomes equity they own in the company - Angel investors are similar to venture capitalists; although angel investors are only one individual, while venture capitalists can be large companies PROS "Venture capitalists are looking to fund projects that are unique and can't be easily replicated."