Who Can Receive Venture Capital?

Venture capitalists are usually professional investors that buy the shares of newly opened or start-up business. These investors buy share that will last for a limited period of time.

This type of funding allows small companies to experience growth in their first years. The participation of venture capitalists allows small companies to be more attractive to financial institutions and improve the possibilities of getting bank loans.

When a company receives Venture capital, the owners are able to get advice from the investors and sometimes even use their contacts in the industry.

Is there a difference between capital investment and Venture capital?

Venture capital includes all operations that involve buying shares of unlisted companies. These equity investments, usually minority, are performed by specialized professionals whose main aim is to achieve substantial gains in a relatively short time, usually between 4 and 5 years.

There are different kinds of private equity investments for any area of business development.

Some venture capital is invested only in special sectors, or sectors that are dedicated to perform or investigate selected areas. For examples, companies that do work on biotechnology, or information technology.

Venture capital is almost exclusive to new companies, but not just any company. This kind of capital is given to creative and innovative young companies.

The typical investments of capital are higher than 300,000 euros. However, this does not mean that there are not venture capitalists who invest less. There are angel investors who may invest amounts from as low as 5,000 to 150,000 euros combined with other investors.

There are capital investments for every stage of development of any business. For example, Seed Capital is given to companies that have just started or those that are in the process of developing a new line of product, or prototype. Of course, this kind of funding is given to companies that are already legally constituted.

Capital investment can be given also to companies that are have been in the market for some time. Post-creation capital is the kind of investment that applies to them.

The term “venture capital” concerns only the first two types of intervention.