Venture capitalists finance the start-up, development, expansion, restructuring
or acquisition of companies. They're the engines of growth in today's cutting-edge
They study companies using a three-step process. They look at the market
involved -- whether it's computers, entertainment, agriculture or another
field. Then they become familiar with the management team of the company they're
considering investing money in.
Finally, they evaluate the company's products to see if an opportunity
exists for business growth. And the product should be unique.
Venture capitalists give medium- or long-term financing to a company. This
may include bonds or loans that may, in turn, let them share in the particular
company's capital. Sources of venture capital include individuals, private
firms, organizations or government programs.
These investment sharks aren't passive. They participate in the companies
they invest in and guide them toward increased growth. They handle investments
of a few million dollars up to over a billion dollars.
U.S. high-tech industries are common markets for venture capitalists. Venture
capitalists also invest in agriculture, industrial products, entertainment,
construction, business services, retail companies and more. Some are involved
in start-up ventures that are geared toward social responsibility.
These investors are employed by private firms, commercial banks, industrial
corporations and even government-related programs which help boost the start
up of new companies through state, local or federal programs.