The Importance Of Venture Capital Financing

ABSTRACT Venture capital financing is a type of financing by venture capital. For starting a new startup company or to bring a new product to the market, the venture should have to attract funding. Venture capitalists include experts of different fields. They give funds to the firms after carefully examining the projects. Their main focus is to procure huge profits for their investments, but their ideas are totally different from the traditional moneylenders. Venture capitalists provide both loans and equity investments in startup companies. Venture capitalists seek higher interest rates say 30 percent to 50 percent for loans rather than banks and other lenders. Mostly venture capitalists invest in those companies which they anticipate being

But recently researchers showed the negotiation process between a venture capital investor and an entrepreneur, integrating the bargaining power of both parties. When bargaining power is unbalanced, the party with greater power attempts to achieve an advantage at the expense of the other party. Entrepreneurs expecting to raise venture capital financing compete for funding from the best possible venture capital investor to which they have entry, while venture capital investors go after the most guaranteeing entrepreneurial firms. Venture capital administrators are typically compensated with a settled administration fee and a carried premium execution fee. Independent venture capital investment directors are specialists in negotiating contracts with entrepreneurs. They are highly organized quality maximizing financial experts who are likely to be seen as the most modern investors, given their more prominent experience and their greater involvement with their portfolio organizations. When we look at the valuations of other venture capital types with the valuations of independent venture capital firms, we are interested on the relative bargaining power of different sorts of venture capital firms compared with the bargaining power of an independent venture

This type of funding is provided to those companies which are just organized or those companies which have been in business just for a short time but have not yet sold their product in the market.

3) Second stage

At this stage, we assume that the thought has been changed into an item and is being delivered and sold. This is the first experience with whatever is left of the business sector, the competitors. The venture is attempting to crush between the rest and it tries to get some piece of the overall industry from the competitors. This is one of the fundamental objectives at this stage.

4) Third stage

Funds are accommodated the real extension of an organization which has increasing sales volume and which is breaking even the initial investment or which has attained initial profitability. Funds are used for further plant extension, marketing, and working capital or for improvement of an enhanced item, another innovation, or an extended product offering.

5) Bridge stage

This is the last stage in venture capital financing. At this stage the venture is in a position of having a good market share in the market. In this stage the main goal of the venture is to go public so that the investors can exit the