Management and Organizational Studies 1023A/B Lecture Notes - Lecture 7: Venture Capital Financing, Venture Capital, Preferred Stock

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1023A/B
• Professor: Barry Hawn

Document Summary

Venture capital: venture capitalists are individuals or firms that help new businesses get started and provide much of their early-stage financing. Individual venture capitalists or angel investors, are typically wealthy individuals who invest their own money in emerging businesses at the very early stages in small deals. 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 increases the diversification of the originating venture capitalist"s investment portfolio: the willingness of other venture capitalists to share in the investment provides independent corroboration that the investment is a reasonable decision. There are three principle ways in which venture capital firms exit venture-backed companies: sell to a strategic buyer in the private market, sell to financial buyer in the private market. Initial public offering: selling common stock in an initial public offering (ipo)