The term "venture business" came about as a result of the translation of the English word "venture", which means a venture or venture. This type of business is focused on the use of new technologies or the results of scientific achievements in practice.
Venture business as a form of investment in Russia began its development relatively recently, but its main players and development directions have already been clearly defined. He is mainly engaged in the transformation of scientific and technological achievements, from the initial idea to the introduction of this technology into mass production.
Venture business features
A venture company is closely interlinked with innovation, but at the same time, its activities do not necessarily include innovative technologies. For example, this may be the introduction of a venture project in new markets. But at the same time, ideas and new inventions will remain unrealized without venture financing, since all activities related to innovations are very risky. Only the organization of a venture business gives investors the opportunity to make a profit that far exceeds the initial investment.
Differences from traditional activities
The venture business is primarily distinguished by the fact that its financing is carried out without guaranteed collateral. The necessary funds are provided only for a promising idea. In this case, the pre-agreed share of the shares of the venture company serves as a pledge .
If the business of the created company goes well, then at a certain stage, the investor will be able to sell his shares and not only return the invested funds, but also get quite acceptable profit. If the project is a failure, then the investor will be able to claim only a certain part of the assets of the company, depending on its share in the authorized capital.
But do not think that investors do not take business risk into account when financing venture projects. On the contrary, they plan to get considerable profit from their investments, many times higher than the percentage of bank deposits.
Of course, a venture capital business involves a certain risk, but a reasonable investor will never invest in a knowingly losing venture.
Financing
An investor, financing a venture project, does not count on quick profits, the contract is concluded on a long-term basis. He plans his exit from the project in advance. Therefore, the company should be prepared for such a development of events so that the withdrawal of funds does not affect its operating and financial activities.
The investor makes special demands on the project team. Very often money is allocated not so much for an idea or project, but more for specific people.
Advantages of such a project:
- Venture capital business helps to raise the necessary funds for the implementation of risky, but promising projects, when other sources of financing are not available.
- Money for the implementation of the project is allocated without collateral.
- Financing is done in a short time.
- This method of investing does not involve the payment of interest, dividends, etc.
Disadvantages:
- It is very difficult to find and interest investors.
- The investor needs to allocate a share in the authorized capital.
- An investor can exit the project at any time by selling its shares to a third party.