All About Venture Capital Fund |

The shared capital made by investors for companies that could not be entertained by banks or other institutions for risk purposes are called Venture Capital Fund. These new ventures may specialize in software, medical devices, drugs or new technology that has strong growth potential. The investors would supply the fund for the new companies in order for them to gain capital share if it prospers. The difference between a private equity fund and a venture capital fund is that a venture fund cannot sell its stocks not unless the company has remained in activity for a span of time.

Most of Venture capital funds have a limited span of ten years but could be extended to allow private companies seeking liquidity. For most Venture Capital Funds, a span of not more than 5 years is the investing cycle, after which, investments are focused on expansions and managing the companys portfolio. A piece of the funds net earnings as well a management fee is what the manager of these funds could receive. These compensation packages allow managers to share their full potential and capabilities to the business in order for it to be profitable.

The source of venture capital funds may be obtained through small savings and business associations, venture capital companies that invests its funds, HNWIs (or high net worth individuals who are more willing to invest in high risk-high returns companies and institutional investors (such as insurance companies, pension and investment companies). Preferred shares are the common composition of most of the investments for the reason that it would eventually be sold to public or acquired by another investor. To add, funding on venture capital funds is dangerous. New companies do not succeed or under perform thus it is considered one of the riskiest investments an investor could make. Not putting your eggs in one basket should be done by investors in order to prevent many losses.

Incoming search terms:

• VC activity medical device

Source: http://www.postarticles.ca/all-about-venture-capital-fund/

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