Venture (translated from English is a risky enterprise) is an investment company whose activities are exclusively related to innovative projects (startups). Venture capital funds are invested in securities, enterprises with a fairly high share of risk in order to obtain extremely high returns in the near future.
As a rule, venture financing belongs to the field of the latest scientific developments and technologies. According to statistics, about 70-80% of such investments do not bring returns, but 20-30% of successful projects cover all the losses incurred and bring investors profit.
Venture financing is aimed at investing in venture capital enterprises, which are small businesses that undertake development work and knowledge-intensive work, preparing the basis for venture capital projects.
Ventures are internal and external. Internal venture is organized by the authors of the idea themselves together with venture entrepreneurs. External venture attracts funds for its projects through special funds and funds of other investors.
Venture financing is a risky business aimed at the use of technological and technical innovations and achievements of science, not previously used in practice. This type of financing is associated with a serious risk of non-receipt of income, as a result of which the invested funds may remain uncovered.
Venture financing is used for projects for which it is impossible to obtain funds in the form of a bank loan or other generally accepted sources of financing.
Today there is the concept of venture capital business. It implies a business focused on the use of new developments that are only planned to be put into practice. At the same time, venture capital refers to long-term investments in securities and risky ventures that are invested in the expectation of quick excess profits.
Venture operations are aimed at lending and investing in the latest inventions and developments. Such operations are characterized by an increased degree of risk. Venture banks are created specifically for lending to risky projects. In cases of successful implementation of projects, such banks receive part of the income, a share of the profit from the successful implementation of development or innovation.
The main task of a venture investor is to invest in the most promising business to make large profits by selling its stake in the company.
Venture capital can come from different sources: from large companies, the state, banks or specialized funds. Venture financing in Russia is most often carried out by large companies with available funds. To date, the share of venture investment by the state has increased in the country. Specialized funds have appeared in many regions of Russia. Private foundations are still very limited. Banks in general do not risk investing in risky projects.
When searching for a project for investing in a venture capital company, the emphasis is not on the invention or innovation itself, but on the features of the inventor involved in business. Therefore, when choosing a project, a competent business plan is of great importance.
After selecting a project, the company into which venture financing is supposed to be invested is subject to audits. Only after that the contracts are signed and the investment process is carried out. In the future, the investor receives the right to certain control over the company and influence on the processes occurring in it.