Source: BVCA Site
What is venture capital? (Key facts about venture capital in the UK)
Lenders such as banks have a legal right to interest on a loan and its repayment, irrespective of the borrower's success or failure, whereas the venture capital investor's returns are dependent on the growth and profitability of the business.
Owners sell some shares in their companies to the venture backer, who may seek a non-executive board position and attend monthly Board meetings.
Venture capital investors will provide a developing company with:
Before raising venture capital
Sources of Venture Capital
As a basic guideline there are two main sources of venture capital with broadly different investment preferences.
Venture capital firms
How to target a source of venture capital effectively
Types of investment
Some of the most common types of investment:
Finance to develop a business concept, perhaps involving the production of a business plan, prototypes and additional research, prior to marketing a product and commencing large-scale manufacturing.
Finance to develop the company's product and fund their initial marketing. Companies may be in the process of setting up or may have been trading for a short time, but have not sold their product commercially.
Finance to initiate commercial manufacturing and sales for companies which have completed the product development stage, but not yet generating profits.
Finance to expand an established company - to increase production capacity, product development, marketing and to provide additional working capital. Also known as "development" or "growth" capital.
Short-term venture capital funding, generally provided to a company planning to float within a year.
Finance to reduce a company's gearing level.
When a venture capital firm acquires existing shares in a company from another venture capital firm; finance to allow existing non-venture capital investors to buy-back or redeem part, or all, of another investor's shareholding.
Finance to enable a company to resolve its financial difficulties or to rescue it from receivership.
Finance to enable the current operating management to acquire, or to purchase a significant shareholding in, the business they manage.
Finance to enable a manager or group of managers from outside a company to buy into it.
Finance to enable a venture capital firm to acquire a company, following which the incumbent and/or incoming management will be given or acquire a stake in the business.
When a venture capital firm buys a company with the aim of making further relevant acquisitions to develop a business group.
Loan finance which is halfway between equity and secured debt, generally more appropriate for larger transactions. Often provided as part of a venture capital package, it can also be provided by specialist mezzanine firms.
Finance provided to take a quoted company into private ownership.
Venture capital firms prepared to take stakes and/or acquire shares in quoted companies.
Scottish Medical and Health Care Venture Capitalists
British Venture Capital and Private Equity Association
BVCA is involved in many different areas of business support, including
Programmes are run exclusively for members, ranging from introductory courses on venture capital to specific tuition on legal agreements.
Annual analysis on venture capital investments and the resulting effects. Membership directories, The Guide to Venture Capital and research documents are produced by the BVCA. Press releases on recently aided companies are also available.
Nationwide events from workshops to dinners.
A wide range of publications aimed at those looking to raise venture capital and to promote awareness of private equity to entrepreneurs.
For further information on the BVCA refer to their website www.bvca.co.uk
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