Venture Capital Financing Essay -- essays research papers fc

What is speculation CapitalVenture capital is money provided by professionals who invest alongside management in young, rapidly growing companies that draw the potential to develop into significant economic contributors (NVCA). Venture capital is an Copernican source of equity for turn up-up companies. These portfolio companies that receive ship capital are suasion to fool excellent growth prospects. Start-up companies dont usually have the access to capital markets because they are private. Venture capitalists are one declaration to financing high risk, but potentially high reward companies. unremarkably the investors receive a say in the companys management, they may be on the board, and they expect to receive returns 5-10 times their investment of up to 50 million dollars (Burk). story of Venture CapitalIt is important to start out with the history of chance capital to see how it has grown as well as to show its ups and downs. It was thought to be developed in the year s following WWII but it can actually be date all the way back to partnerships in the Babylonian Code (Gompers). These Babylonian partnerships used gold or silver to finance caravans. The terms for were 12 years and 100% profits (Heise). Much later the first venture capital firm was established in 1946. Karl Compton, the MIT President, along with Georges Doriot, a Harvard stock School Professor, formed American Research and Development (ARD). There were besides local businesses leaders involved in the project. During the war, there were many invigorated technologies developed as well as other innovations from MIT. About half(prenominal) of ARDs profits came from its investment in Digital Equipment Company in 1957. It had only invested $70,000 but had grown in value to $355 million.A decennium later, many other venture capital firms were formed. They were all structured as publicly traded closed-end funds as were ARDs. Closed-end are mutual funds whose shares must be sold to othe r investors, instead of being redeemed from the upshot firm. In 1958, the first venture capital limited partnership was formed, Draper, Gaither, and Anderson. Others in brief followed suit, but limited partnership remained the minority during 1960s and 1970s. The rest were either closed-end funds, or small business investment companies. During these years, the total annual venture funds were small and never exc... ...try. They are very optimistic roughly the future of venture capital funding. They say this is due to the fact that much investors are investing in venture capital, as well as the increase of IPOs (Raffa).Works CitedBartlett, Joseph. Fundamentals of Venture Capital. Rowman Publishers, 1999.Burk, James, and Richard Lehman. funding Your Small Business. Sphinx Publishing,2004.Camp, Justin. Venture Capital Due Diligence. Wiley Inc, 2002.Gompers, Paul, and Joshua Lerner. Venture Capital Cycle. Cambridge The MIT Press,2000.Heise, John. The History of the Bronze Age in M esopotamia. 1996.http//mahan.wonkwang.ac.kr/lecture/ancient/meso/sron/bronze_age.htmlNational Venture Capital Association. 2005. http//nvca.org/Raffa, David. Pipe Dreams and Other Opportunities on the Venture Capital roadwayAhead. 2004. www.catalyst-law.com/document/237Sherman, Andrew. Raising Capital. 2nd ed. Amacon, 2005Timmons, Jeffrey, et al. How to Raise Capital. McGraw-Hill Companies, 2004.Venture Capital Journal. Thomson Financial, 2005.http//www.venturecapitaljournal.net/vcj/topnews.html