Venture capitalists are rewarded by business success and the capital gain. The SEBI has defined Venture Capital Fund in its Regulation 1996 as ‘a fund established in the form of a company or trust which raises money through loans, donations, issue of securities or units as the case may be and makes or proposes to make investments in accordance with the regulations’.Ĭharacteristics Long time horizonLack of liquidityHigh riskEquity participationParticipation in managementĪdvantages It injects long term equity finance which provides a solid capital base for future growth.The venture capitalist is a business partner, sharing both the risks and rewards. Venture Capitalists generally:Finance new and rapidly growing companiesPurchase equity securitiesAssist in the development of new products or servicesAdd value to the company through active participation. Meaning Venture capital means funds made available for startup firms and small businesses with exceptional growth potential.Venture capital is money provided by professionals who alongside management invest in young, rapidly growing companies that have the potential to develop into significant economic contributors.
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