Entrepreneurial finance and venture capital

Entrepreneurial companies face main issues like a high-risk investment. In return to that risk, they will also face high returns also. The two main sources for the accumulation of the capital are the Banks and the Venture Capitalist. Banks will monitor less effectively and they face the capitals demands from their own investors. Venture capitalist monitor high effectively and face a high cost of capitals. But the disadvantage of a venture capitalist is they charge a large number of returns of at least 30-40% per year whereas this is very less in banks. The capital amounts provided by the banks or the venture capitalist changes based on the type of ventures. They are

 

  • Institutional Venture Capitalist Funds
  • Small business investment companies
  • Financial venture capital funds
  • Corporate venture capital funds
  • Venture capital limited partnerships

But this venture capitalist does not finance in the early stages of the business. The early stages of the business include funding from friends, family, seed stage financing, angel investors etc. The basic difference between the venture and the seed stage financing are as follows:

 

Venture Capitalist Seed Stage Funding
They start with the companies which are matured They start funding at the seed stage of the company
They usually fund millions and ten million at a time Their funding will be of thousand USD to One million

 

After all, the basic motto of the funding companies is to encourage the new talent to direct them to the future successful entrepreneurs

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