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Stages of Venture capital

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Shanika Fernando

on 13 December 2015

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Transcript of Stages of Venture capital

Venture capital
VENTURE CAPITAL IS MONEY PROVIDED BY OUTSIDE INVESTORS FOR FINANCING

NEW,
GROWING or
STRUGGLING

BUSINESSES.
Venture capital investments are generally
HIGH RISK
investments but
offer the potential for
ABOVE AVERAGE
returns.

Stages of venture capital
STAGE 1 - Explore
Idea or concept to business
The product is still in the R&D stage.
The venture have to convince the investor why the idea is worthwhile.
Company
VC
The venture capitalist will investigate the technical and economical feasibility.
If the idea is not feasible in the current market conditions, further investigations are made to check its feasibility in the future.
Evaluate the risk involved in the process.
STAGE 2 - Validate
Company
VC
Building up an attractive business plan
Forming a management team
Appoint board of directors
Obtain a seat in the director board to represent the VC
Monitoring the feasibility of the product
Capability of the management team
STAGE 3 - Build
Company
VC
Market research to identify opportunities and potential clients.
In case if the investor leaves, need to find another investor
Monitor the results of the market research to identify the possibility of expansion
If the business seems successful ,Push the venture to the next stage
If the performance of the venture is low ,cease funding .
STAGE 4 – Launch
Company
VC
Production and sales is started.
Minimize and control costs ,try to reach the break even.
Management team need to be very decisive.
Monitor the development process of the management team and their reaction to competition
Restructure the management team in order to achieve better performance.
STAGE 5 – Growth
Company
VC
Expand the market share
Increasing sales and conducting market campaigns.
Conducting a SWOT analysis.
Invent sub-products
Monitor whether the objectives of the second stage are achieved and what are the new objectives
Evaluate the feasibility of new/sub products
STAGE 6 – Maturity
Company
VC
Go for a IPO/Merger
Examine the market position of the product, Re-position if needed
Go for a IPO and get the  profit commensurate with the risk which was taken.
Venture capitalist investment period
Life cycle of a Business
Significance of segmenting
For Entrepreneurs
For Investors
To identify when to attract venture capitalist
To identify when to invest
Practical Use
National Venture Capital Association (USA)
"As the voice of the U.S. venture capital community, the National Venture Capital Association (NVCA) empowers its members and the entrepreneurs they fund by advocating for policies that encourage innovation and reward long-term investment."
American venture capital market
nvca.org/about-nvca/who-we-are/
Money Tree- Report
MoneyTree™

The MoneyTree™ Report is a quarterly
study of venture capital investment
activity in the United States
Prepared by
PricewaterhouseCoopers
National Venture Capital Association
Data Provided by
Thomson Reuters
www.pwcmoneytree.com
Stage of development definitions
The stage of development classifications used in the MoneyTree™ Report
"MoneyTree™ Report Q1 2015" PricewaterhouseCoopers National Venture Capital Association Data provided by Thomson Reuters
"MoneyTree™ Report Q1 2015" PricewaterhouseCoopers National Venture Capital Association Data provided by Thomson Reuters
Investments by stage of development
Q1 2015, Q4 2014, and Q1 2014
Stages of Venture Capital
Full transcript