Venture capital investors, “venture capitalists” or “VCs” provide capital to young companies that can not raise capital from public share markets and can not or do not wish to raise capital through bank loans.
These firms typically are either early stage ventures which have not yet become profitable.
Investments are typically held for 3 - 7 years.
Investors typically expect annual returns between 30% - 50%+ depending on the risk of the investment.
Investors are typically actively involved in their investments through seats on the Board of Directors.
Various Investment Classes for Investors Perceived Investment Risk Seed Capital Venture Capital Equity - Early Mezzanine Capital Private High Yield Leveraged Bank Debt Venture Capital Equity - Late Buyout & Later Stage Equity 10.0% 20.0% 30.0% 40.0% 50.0% Target Annual Return on Investment 1.0x 2.0x 2.5x 5.0x 10.0x Multiple of Investment
Proposal Pyramid 1000 proposals received in the year 100 get beyond first read 10-15 investigated in depth 2-5 get funded Bottomline : It is very, very difficult for most companies to receive venture capital financing.