One of the greatest facets of a capitalist economy, particularly in the United States, is venture capital and the advantages that it gives to many sectors and businesses. The concept of Venture Capital centers around having investors or groups of investors putting their money into a project or start up company that cannot raise the funds on its own. Instead of having that company take out a loan or raise money through a small IPO, venture capital allows for an investor or investors to move the start up forward. These investors typically become part of the board of the company, so that they can have a say in the decisions that are made.
At times, those who invest might end up taking control of the company. If the people behind the start up want to sell the company, it would go that route. However, most of the time the investors simply become high ranking officials in the company and get a huge percentage if there is ever an IPO and stocks are released for the company. These details are often decided on at a later date. Initially, an investment is made so that the start up can pursue its idea.
In the past five to ten years, most of venture capital trends have been focused on technology companies. There has been so much technological advancement, particularly with things such as smartphones, tablet computers, e-readers, and advanced laptops/desktops. This means that there are even more pieces of code and software that need to be created and written. If a start up company has a particularly good idea, they will pitch it to a venture capitalist so that they can get the funding for their project.
It is important to remember that most of these advancements would not be possible without venture capital. So many great ideas have come from innovative minds that did not have the funds to pursue their own ideas. Instead of having those ideas go to waste as unfulfilled dreams, venture capitalists came in and helped those companies get started.
The venture capital trends could change for the coming years. While technology is still an important part, it is possible that a new area of concentration could come in. Whatever happens, we can be sure that venture capitalists will continue to provide the United States economy with the potential to grow. For without their investment capital, growth in the economy would go down by a considerable amount.
Sharpen your strategic venture capital investment view by reading more from David Hand Crescent Point Asia or get more about Crescent Point Venture Capital stories, the leading emerging markets investment management and financial advisory firm primarily targeting in the Asia-Pacific and Middle East regions.