Venture capital can be defined as the available money for new, growing and yet not established fully. Venture capital is for the businesses that have little or no access to the capital market for gaining capital for their growing business.
Types of Venture Capitals
There are generally three types of venture capitals and these are explained as under:-
The Seed Capital
This type of venture capital is the amount of money that is offered to the ideas that are under process but are not yet preceded to the market.
Early Stage Capital
This is the kind of capital that is granted by the venture capitalists to the growing businesses. These businesses are in the second and the first stage of their growth.
The third type of the capital is expansion capital and is offered to the business that are now grown to a major entity but require more financing in order to expand their business in the market.
From where do the Venture Capital Comes
Although most of the venture capital come from the individual that are called as venture capitalist however there are certain firms that also offer venture capital to the expanding and growing businesses. These capital offering firms mostly operate in partnership and they obtain the capital from rich and wealthy individuals. Another task in which the venture capital can provide assistance is the mergers and acquisitions of the other companies.
Why Venture Capital is Important
Venture capital is one of the most readily available from of investment that helps in frosting the entrepreneurship. Venture capital is sometimes the only source of investment in industries that comes with innovative ideas and technicalities. It is also luring for the investors as it let the investors to involve at the ground level in the businesses that may become giant entities in near future.
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