venture capital

(noun)

money invested in an innovative enterprise in which both the potential for profit and the risk of loss are considerable.

Related Terms

Examples of venture capital in the following topics:

  • Small Businesses and U.S. Jobs

    • Recent advancements in technology can reduce the amount of capital needed to start a small business and increase opportunities to scale up rapidly and cost efficiently.
    • While different industries display differing degrees of entry barriers, most small businesses must obtain a certain amount of capital to begin operations.

  • Financing Company Operations

    • Many businesses need more capital than can be provided by the owners themselves.

  • Growth through buying out other companies

    • These opportunities have become even more frequent in recent years due to the increasing availability of venture capital, and of capital resources from initial public offerings (IPOs).

  • Inadequate or incorrect marketing, cooperation, finance, or HR strategies

    • The only alternative that remains is seeking outside capital.
    • In addition, start-ups with high growth potential in certain industries, can trade partial ownership in their firms for "venture capital".
    • Start-ups can also make another growth mistake in financing by launching their IPOs on the stock market too soon and simply using this revenue to repay debt or venture capital and replace it with equity from the capital market.

  • Joint Ventures

    • Sony acquired Ericsson's share in the venture in 2012.
    • MillerCoors is a joint venture between SABMiller and Molson Coors Brewing Company.
    • A joint venture takes place when two parties come together to take on one project.
    • It has a separate liability from that of its founders, except for invested capital
    • Either or both parties no longer agree with joint venture aims

  • Key Characteristics of Entrepreneurs

    • No other element can do so much for a man if he is willing to study them and make capital out of them.
    • Creativity: The entrepreneur must be able to inject imagination and uniqueness into a new business venture.
    • It takes skill and ingenuity to create a new venture equipped with strategies to outsmart the competition.
    • Passion: Entrepreneurs must have a desire to succeed in a business venture under their own initiative.
    • Self-discipline: The entrepreneur must be organized and regimented in pursuit of a successful business venture.

  • Summary and references

    • Buying out entire companies is also suitable as a growth strategy, but it presupposes the availability of sufficient capital, and the solution of acculturation problems.
    • Journal of Business Venturing (5): 137-150.
    • McGee, J.E., Dowling, M.J. and Megginson, W.L. (1995): Cooperative strategy and new venture performance.
    • Siegel, R., Siegel, E. and MacMillan, I. (1993): Characteristics distinguishing high growth ventures.
    • Journal of Business Venturing 8(2): 169-180.

  • Joint Ventures

    • In a joint venture business model, two or more parties agree to invest time, equity, and effort for the development of a new shared project.
    • A joint venture is a business agreement in which parties agree to develop a new entity and new assets by contributing equity.
    • While joint ventures are generally small projects, major corporations use this method to diversify.
    • Since money is involved in a joint venture, it is necessary to have a strategic plan in place.
    • Some major joint ventures include Dow Corning, MillerCoors, Sony Ericsson, Penske Truck Leasing, Norampac, and Owens-Corning.

  • Sources of financing for your organization

    • Angel investors, venture capitalists: Venture capitalists are usually not interested in start-ups.
    • They tend to invest in young companies after they have demonstrated that they are clearly on a path to profitability and they need additional capital to help them grow quickly.
    • The strategy will allow Andreessen to back many more startups than the average venture firm, but with less control" (BusinessWeek.com 2009).
    • But if you're one of those entrepreneurs with capital problems, don't hesitate to ask for help from the government.
    • If he can prove the feasibility of his business proposal, the government will immediately provide the needed capital assistance through the entrepreneur grants.

  • Joint ventures and direct investment

    • A joint venture is a partnership between a domestic firm and a foreign firm.
    • Joint ventures require a greater commitment from firms than licensing or the various other exporting methods.
    • A domestic firm may wish to engage in a joint venture for a variety of reasons; for example, General Motors and Toyota have agreed to make a subcompact car to be sold through GM dealers using the idle GM plant in California.
    • Organizations engaging in licensing or joint ventures do not own manufacturing and marketing facilities abroad.