Question

What is ‘venture capital’? Explain the mode of raising funds.

Answer 1

Answer:

Venture capital is a form of financing that provides funds to early stage, emerging companies with high growth potential, in exchange for equity. When choosing companies to invest in, they consider the company's growth potential, the strength of its management team, and the uniqueness of its products or services.

The people who invest this money are called venture capitalists (VCs). The venture capital investment is made when a venture capitalist buys shares of such a company and becomes a financial partner in the business.

Venture Capital investment is also referred to risk capital or patient risk capital, as it includes the risk of losing the money if the venture doesn’t succeed and takes medium to long term period for the investments to fructify.

THE MODES OF RAISING FUNDS ARE: debentures,long term& short term loan,equity shares,bank loan,public deposits and trade credit (short term loan)

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Answer 2

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VENTURE CAPITAL is defined as a equity by which an investor supports an entrepreneur talent with finance and business skills to exploit market opportunities and thus obtain a longterm market profit.