ECON 2560 Chapter Notes - Chapter 15: Venture Capital, Underwriting, Discounted Cash Flow
30 Jul 2013
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Venture capital: money invested to finance a new firm. Is provided by specialized venture capital firms, financial & investment institution s(such as banks & pension funds) & government agencies. Angel: a wealthy individual investor in early-stage ventures. Seek this out if you need really early stage financing for a new enterprise. Angels also bring hands-on contribution to small-scale investments and early-stage ventures. It"s hard to convince a venture capitalist to invest in your business. Must 1st prepare a business plan that describes your product, the potential market, production method, and the resources (time, money, employees, facilities & equipment) needed for success. Once business has grown to point where it needs further equity, the 2nd stage of financing involves issue of more shares from original investors to by other venture capital firms. Most venture capital funds are organized as limited private partnerships w/a fixed life of about 10 years. Pension funds & other investors are the limited partners.
