By Damian Sofsian

Venture capital finance is instrumental in inducing technological development, stimulating creativity and innovation and nurturing entrepreneurship. Concerted efforts are required by financial institutions, private sectors and other agencies to create a conducive environment for the growth of venture capital. In particular, initiatives are required to widen the perspective of venture capital finance and create a favorable fiscal and regulatory environment.

The venture capital schemes of the term-lending financial institutions presently focus mainly on supporting development of technology and implementing indigenously developed yet untested technologies. While this concern is understandable because of a genuine need for expanding the base of viable indigenous technology, it leads to a somewhat limited view of venture capital. What is required is a broader perspective on venture capital so that it is viewed as an instrument for financing a wide range of projects that essentially have a “high risk- high-return” profile.

In this context, it is important that entrepreneurs, financing bodies, fiscal authorities, regulatory bodies and others understand the concept and relevance of venture capital. It should be appreciated that venture capital is an instrument for strengthening entrepreneurial forces in the economy; a device for inducing risk taking and a mechanism for promoting a closer investor/investee relationship. Those who participate in venture capital arrangements must overcome certain traditional psychological barriers and be willing to build a relationship of genuine partnership and not a perfunctory association of limited involvement.

To nurture the growth of venture capital, a favorable fiscal and regulatory environment should be created. Some of the specific things that may be are investors subscribing to the capital of venture capital funds may be given greater tax reliefs, and the long-term capital gains of the venture capital funds may be taxed at a concessional rate or even exempted totally from taxation. Orderly and efficient mechanisms must be evolved to facilitate liquidation of investments of venture capital funds.

There are two types of people in the world. These are the rich who have money and those that don’t. When the person has money, there will be no problems going on a shopping spree in New York or hop on board a plane to see paradise in the Bahamas. The average Joe can also do that but will have to same that amount over a few months or even years.

If the rich individual doesn’t do anything to preserve the wealth, this will soon disappear. This is the reason that being a venture capital investor seems to be a good idea.

A venture capital investor is an individual who would like to help fund an entrepreneur. There are two kinds namely the person who will wait to receive such a proposal while the other is out there hoping to see something interesting.

In the end, the venture capital investor will be reviewing the business plan to make sure it is sound and also meet the entrepreneur in person to clarify some issues. There are some people who might take advantage of the individual so a background check will be done even before the meeting takes place.

The venture capital investor who is well aware of the trends for example in the information technology will not want to do business in a field that is unknown to that individual.

This means the person will only gamble on a high-risk investment in the preferred comfort zone. This approach is advantageous to the entrepreneur because the years of experience in that field can be useful in the partnership.

What does a capital venture investor get from all of this? In exchange for the money being shelled by the individual, there are also a certain number of shares that will be given to get a seat among the board of directors.

This will ensure that the investor can play an active role in the direction of the business to be able to safeguard the money that was invested into the project.

As the company grows, the money invested by the investor will be returned and the profits will be shared increasing the current wealth of the person.

Being a venture capitalist is a win-win situation for the individual and the entrepreneur. After all, two heads are better than one in making the day-to-day decisions so the company will become profitable in the long run.

Low Jeremy maintains http://venture-capital.articlesforreprint.com This content is provided by Low Jeremy. It may be used only in its entirety with all links included. Article Source: http://EzineArticles.com/?expert=Low_Jeremy

Venture Capital Advice

Founders are a rare breed. You need perseverance, talent, and a high threshold for risk to create your own company. But then comes the big step- how do you finance your project? Founding a business is like learning the first time how to ride a bike. It may take a few falls to the pavement before you can eventually feel comfortable behind the handlebars.

If you need venture capital, some times people think that all you have to do is to contact one of the general partners at the VC, send a copy of your business plan, and you will be invited to the entire partnership. The truth is that partners at VC firms are inundated with business plans and wherever they go they are approached by want-to-be-entrepreneurs. As a result, they tune out a lot of this “noise” and listen instead to the relationships that they have cultivated over the years. You need to be able to tap into this network, and eventually chain your way to the right partner. First be sure that you might need venture capital at some point or if you know that you can not even launch your business without venture capital.

To help area entrepreneurs better navigate the twists, turns and bumps, there have been a set of blogs launched that provide insights into the world of startups and venture capital. Take a look at TechCrunch, ReadWriteWeb or VentureBeat. Still there are other pages like www.seattlepi.com, where features such as venture articles and “Layoff Tracker” can be found.

Here are some tips:

* Start spending time where the venture capital partners hang out. Its not a bad idea to start out a few venture capital websites for information gathering. Also, venture capital partners are typically members of many entrepreneur associations. So first find out what entrepreneur clubs make sense for you to join and attend their events regularly. Since venture capital firms typically focus on certain industries, you must do your research before deciding what organization to join.

* Volunteer for such groups. You will get an opportunity to work with venture capital firm employees on an equal level and it is a great way to develop friendships and connections.

* If you are capable of contributing in other ways, for example, by creating a presentation at a monthly meeting on an area that you know well, do not miss the opportunity.

* Many entrepreneur organizations offer opportunities for mentoring or organize business plan competitions. Make sure to participate in these.

After a couple of months you will be known by others in the industry- who can be a great resource and can also provide you with the right contacts. The key takeaway, its never too early to start planning for your eventual raise of VC money.

Zander Smith SiteRep, EnterpreneursResource Avoid pitfalls of various venture capital firms; look before you leap. Article Source: http://EzineArticles.com/?expert=Zander_Smith

Venture capital funding or financing is a good option for those corporations that have a unique corporate proposition, which could earn high ROIs or returns on investments that would be at least 30 percent annually. These corporations generally need huge outlays of capital.

The venture capitalists typically get an ownership stake, so that they would be able to share with the business risks and profits of the corporation. Hence, it could ultimately become one of the corporation’s institutional shareholders. In exchange, the corporation would be able to benefit from the operational and financial support, which would be provided by the management team of the venture capitalist.

One crucial consideration for the corporation would be to get sufficient capital to be able to quickly achieve market share. The additional funding that has been raised through venture capitalists could provide the company with a sufficient working capital to have the capacity to market, brand then sell the products of the company.

By having a venture capitalist or an institutional shareholder in your corporation, you would be able to give your customer confidence.

Also, by getting a venture capitalist on board would mean that corporate governance is a part of the policy of the company from its start. However, a negative aspect of venture capital funding would be that a company might feel that they lack control as venture capitalists could have stringent covenants such as not allowing the company to be able to change the direction of the business without asking for approval.

A company or corporation must view venture capitalists as individuals who are committed to invest on the growth of the company, thus creating a value for themselves as they provide strategic guidance, sales referrals and business network contacts.

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