Advantages of Venture Capital
Venture capital has a number of advantages over other forms of finance, such as:
Finance
- The venture capitalist typically injects long-term equity finance, which
provides a solid capital base for future growth. The venture capitalist may
also be capable of providing additional rounds of funding should it be required
to finance growth.
Business Partner
- The venture capitalist is a business partner, sharing the risks and rewards.
Venture capitalists are rewarded by business success and the capital gain.
Mentoring
- The venture capitalist is able to provide strategic, operational and
financial advice to the company based on past experience with other companies
in similar situations.
Alliances
- The venture capitalist also has a network of contacts in many areas that can
add value to the company, such as in recruiting key personnel, providing
contacts in international markets, introductions to strategic partners and, if
needed, co-investments with other venture capital firms when additional rounds
of financing are required.
Facilitation of Exit
- The venture capitalist is experienced in the process of preparing a company
for an initial public offering (IPO) and facilitating in trade sales.
|