The term Venture Capital refers to an investment made in a new or nearly new company either to get it off the ground (known as seed funding) or to provide capital for growth – surprisingly known as growth funding).

Venture capital investments are usually made in cash in exchange for shares in the invested company with a view to either getting them to the point of listing on a stock exchange by means of an IPO (Initial Public Offering) or increasing the value of the company for sale in the short term. Venture capital is not intended as a long-term investment.

It is typical for venture capital investors, usually institutional investors and high net worth individuals, to identify and back companies in high technology industries such as biotechnology and information technology).

Venture capital typically comes from institutional investors and high net worth individuals and is pooled together by dedicated investment firms.

Venture capital is high risk but seeks high returns. It isn’t uncommon for investors to take a major share in a company far in excess of the capital employed. Think of the sort of deals that are offered in the TV series Dragon’s Den.

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Category: Guide to City Jargon 

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