FIN 401 Chapter Notes - Chapter 15: Life Insurance, Underwriting, Exit Strategy
12 Mar 2016
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15. 1: the financing life cycle of a firm: early-stage financing and venture capital. Venture capital: inancing for new, oten high-risk ventures: individual venture capitalists invest their own money; so-called angels are usually individual investors, but they tend to specialize in smaller deals. Venture capital irms specialize in pooling funds from various sources and invesing them. The underlying sources of funds for such irms include: individuals, pension funds, insurance companies, large corporaions, university endowment funds. Private equity: oten used to label the rapidly growing area of equity inancing for non-public companies. In addiion to providing inancing, venture capitalists oten acively paricipate in running the irm, providing the beneit of experience with previous start-ups as well as general business experise. Although there is a large venture capital market, the truth is that access to venture capital is really very limited. Venture capitalists rely heavily on informal networks of lawyers, accountants, bankers, and other venture capitalists to help idenify potenial investments.
