Management and Organizational Studies 3370A/B Lecture Notes - Lecture 7: Trade Secret, European Cooperation In Science And Technology, Final Offer
4 May 2015
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Start of new businesses: mostly, started by an entrepreneurs who has a vision for new business or product. How venture capitalists reduce their risk: venture capitalists know that only a handful of new companies will survive to become successful firms, tactics to reduce risk: Staged funding funding the ventures in stages: each stage gives the ventures capitalists an opportunity to reassess the management team & the firm"s financial performance. Often in the form of preferred stock that is convertible into common stock at the discretion (will) of the venture capitalist. Preferred stock ensures that the venture capitalists have the most senior claim among the stockholders if the firms fail, and conversion feature enables them to share the gains if the business is successful. Syndicating investments: it is a common practice to syndicate seed-and early-stage venture capital investments, syndication occurs when the originating venture capitalist sells a percentage of a deal to other venture capitalists, it reduces risk in two ways:
