Venture capital is a fund which is invested in any unproven business enterprise. This business capital is provided by Small Business Investment Corporations, insurance companies and wealthy individual investors. Whenever the venture capitalists invest their money in any unproven business they take one percent of equity ownership of the company so that the venture capitalists can control on strategic planning and payment of fixed fees.
The Venture capital organizations are very helpful for private startup companies but they take high profit in return because they invest their money in any unproven business. The Venture capital is a very good source for small businessman because most of time, the small businessman unable to get bank loans. Besides it, the Venture capital organizations take returns in short period of time and this time period become for within three to seven years that is enough for returning business finance. Those persons who want Venture capital then they have to present formal proposal and conduct a detailed opinions in front of Venture capital organization.
For the small businesses the Venture capital provides several advantages such as management help and lower costs on short term of return. Besides it, there are some disadvantages of Venture capital such as loss of effective control on business as well as comparatively high costs on long term return. Ultimately, the venture capital is a very good source of finance among different business finance sources. Thus, for small business entrepreneurs, the Venture capital is a best way to start up a new business.
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