It can take a lot to get a new business idea off the ground. To answer the question of what is venture capital funding; one must look at what itâ€™s not. Venture capital funding is not a business partnership, small business grants or an investing scheme. Simply put, vendor capital funding is a creative means for supporting the financial needs of small businesses and start-ups that demonstrate potential for increasing revenues. This creates an earning opportunity for investors who have the capital to loan out; with the expectation that this effort will produce a high rate of return over time.
What is Venture Capital Funding – Venture Capitalist Definition & Meaning
Venture capital funding is a popular, non-traditional means of providing money to start or grow a business, with the anticipation of a high rate of return. This method of business funding is also referred to as â€śseed fundingâ€ť. Venture capital funding is a source of finance that comes from private investors, or venture capitalists. Essentially, the money comes from other business owners, neighbors and friends who have an interest in providing the start-up capital for new businesses that have the potential for growth and success. Venture capital funding can benefit those who have the means to fund newly launched companies. From the investor standpoint, it can be a great way to earn additional income over time and provide support to the local economy, without having to do all the work alone.
What do Venture Capitalists Do?
Generally speaking, there isnâ€™t any one method for becoming a venture capitalist or doing business investing in this way. Venture capitalists come from all walks of life, with varied interests and goals. Venture capitalists seek out smaller, newly formed companies and assist them in a variety of ways, from providing short and long term loans to providing referrals and networking opportunities for start-ups to be in the right place at the right time. They are experts at finding entrepreneurs and high potential growth companies that need a little financial assistance to reach higher levels of success. In return, venture capitalists earn a rate of return in the form of interest and in some cases, partial ownership revenues generated as a result of their initial investment. This is done in stages, from start up funding to bridging which gives the business time to grow and flourish while being supported by a venture capitalists wealth.
Benefits of Venture Capital Funding
There are many obvious benefits of venture capital funding. First and foremost, venture capital funding is provided by everyday people who take the time to consider that by supporting other small business, they are also supporting the overall economic conditions of the region in which they also do business. This serves to increase revenues for all involved. Secondly, this can be a good way for entrepreneurs to locate the funding needed to launch a new product line or start a project which will lead to rapid growth of the company. This is especially beneficial when a business finds it difficult or impossible to get money through traditional small business loans or lines of credit. Lastly, venture capital funding can be a positive way in which a serial entrepreneur can launch and earn from many different businesses by supporting start-ups and letting them handle the responsibility of running them on a daily basis. Venture capitalists have the ability to stay in the background, but continue to reap the financial rewards in terms of rates of investment returns.
Find Out More about Venture Capital Funding
Find out more about venture capital funding through FindVenture.com and discover how venture capital financing can benefit you.