Venture Capital ( VC ) is a type of private equity, a form of financing provided by the company or funds for a small, early-stage, emerging company deemed to have high growth potential, or which has shown high growth (in terms of number of employees, annual income, or both). Venture capital companies or funds invest in these early-stage companies in exchange for equities, or shareholdings, in the companies they invest. Venture capitalists risk financing risky start-ups in the hope that some of their support companies will be successful. Start-ups are usually based on innovative technology or business models and usually from high-tech industries, such as information technology (IT), clean technology or biotechnology.
A typical venture capital investment takes place after the initial "initial funding" round. The first round of institutional venture capital to fund growth is called the Series A round. The capitalist venture provides this financing for the benefit of generating profits through an "out" event, such as a company that sells shares to the public for the first time in an initial public offering (IPO) or merges and acquisitions (also known as "trading sales") companies.
In addition to angel investment, equity crowdfunding and other seed funding options, venture capital appeals to new companies with a history of limited operations that are too small to raise capital in the public market and have not yet reached the point where they can secure bank borrowing or complete debt offerings. Instead of the high risk borne by venture capitalists by investing in smaller early stage companies, venture capitalists typically gain significant control over corporate decisions, in addition to a significant share of company ownership (and consequently value). Start-ups like Uber, Airbnb, Flipkart, Xiaomi & amp; Didi Chuxing is a highly respected pilot company, where venture capitalists contribute more than just financing to these early-stage companies; they also often provide strategic advice to corporate executives on their business models and marketing strategies.
Venture capital is also a way in which the private and public sectors can build an institution that systematically creates a business network for new companies and industries, so that they can thrive and grow. The institute helps identify promising new companies and provides them with financial, technical expertise, mentoring, marketing know-how, and business models. Once integrated into a business network, these companies are more likely to succeed, as they become "nodes" within the search network to design and build products in their domain. However, the decision of venture capitalists is often biased, suggesting for example overconfidence and illusion of control, such as entrepreneurial decisions in general.
Video Venture capital
Histori
An enterprise can be defined as a project candidate transformed into a process with assumed adequate risk and investment. With few exceptions, private equity in the first half of the 20th century is the domain of individuals and wealthy families. The Wallenbergs, Vanderbilts, Whitneys, Rockefellers, and Warburgs were the leading investors in private companies in the first half of the century. In 1938, Laurance S. Rockefeller helped finance the manufacture of Eastern Air Lines and Douglas Aircraft, and the Rockefeller family had large holdings in various companies. Eric M. Warburg founded E.M. Warburg & amp; Co. in 1938, which would eventually become Warburg Pincus, with investments in leverage and venture capital purchases. The Wallenberg family started Investor AB in 1916 in Sweden and became an early investor in several Swedish companies such as ABB, Atlas Copco, Ericsson, etc. In the first half of the 20th century.
The origin of modern personal equity
Before World War II (1939-1945), money orders (originally known as "development capital") remained primarily individual domains and wealthy families. It was not until 1945 that private "equity" private equity investments began to emerge, especially with the establishment of the first two venture capital firms in 1946: the American Agency for Research and Development (ARDC) and J.H. Whitney & amp; Company.
Georges Doriot, "father of venture capitalism" (and former assistant dean of Harvard Business School), founded the INSEAD graduate business school in 1957. Together with Ralph Flanders and Karl Compton (former president of MIT), Doriot founded ARDC in 1946 to encourage investment the private sector in business run by soldiers returning from World War II. ARDC became the first institutional private equity investment firm to gain capital from sources other than rich families, although it has some important investment successes as well. ARDC is credited with the first trick when a $ 70,000 investment in 1957 at Digital Equipment Corporation (DEC) would be worth over $ 355 million after the company's initial public offering in 1968 (representing a return of more than 1200 times on investment and a 101% annual rate of return).
Former ARDC employees later established several leading venture capital firms including Greylock Partners (founded in 1965 by Charlie Waite and Bill Elfers) and Morgan, Holland Ventures, the predecessor of Flagship Ventures (founded in 1982 by James Morgan). ARDC continued to invest until 1971, when Doriot retired. In 1972 Doriot incorporated ARDC with Textron after investing more than 150 companies.
John Hay Whitney (1904-1982) and his colleague Benno Schmidt (1913-1999) founded J.H. Whitney & amp; The Company in 1946. Whitney has invested since the 1930s, founded Pioneer Pictures in 1933 and acquired a 15% stake in Technicolor Corporation with his cousin Cornelius Vanderbilt Whitney. Florida Foods Corporation proves Whitney's most famous investment. The company developed an innovative method to provide nutrition to American soldiers, later known as Minute Maid orange juice and sold to The Coca-Cola Company in 1960. J.H. Whitney & amp; The Company continued to invest in leveraged purchase transactions and raised $ 750 million for the sixth institutional private equity fund in 2005.
Initial Capital and Silicon Valley growth
One of the first steps towards a professionally managed venture capital industry was part of the Small Business Investment Act of 1958. The 1958 Act officially permitted the US Small Business Administration to grant licenses to the "Small Business Investment Company" (SBIC) ) to assist the financing and management of small entrepreneurial enterprises in the United States.
During the 1950s, putting a joint venture capital agreement may require the help of two or three other organizations to complete the transaction. It is a thriving business, and as the business grows, transactions grow exponentially.
During the 1960s and 1970s, venture capital firms focused their investment activities primarily on starting and expanding the company. More often than not, these companies exploit breakthroughs in electronic technology, medical, or data processing. As a result, venture capital is almost synonymous with technological finance. An early Western venture capital company was Draper and Johnson Investment Company, formed in 1962 by William Henry Draper III and Franklin P. Johnson, Jr. In 1965, Sutter Hill Ventures acquired the portfolio of Draper and Johnson as an act of incorporation. Bill Draper and Paul Wythes were the founders, and Pitch Johnson formed the Asset Management Company at the time.
It is generally noted that the first venture-backed startup was Fairchild Semiconductor (which produced the first commercially practical integrated circuits), funded in 1959 by what became Venrock Associates. Venrock was founded in 1969 by Laurance S. Rockefeller, the fourth child of six children John D. Rockefeller, as a way to allow other Rockefeller children to develop exposure to venture capital investment.
It was also in the 1960s that a common form of private equity funds, still in use today, emerged. Private equity firms hold limited partnerships to invest where investment professionals serve as general partners and investors, who are passive limited partners, build capital. The compensation structure, still in use today, also appears with limited partners who pay an annual management fee of 1.0-2.5% and the carrying interest usually represents up to 20% of the partnership profits.
The growth of the venture capital industry was driven by the emergence of independent investment companies on Sand Hill Road, beginning with Kleiner, Perkins, Caufield & Byers and Sequoia Capital in 1972. Located in Menlo Park, CA, Kleiner Perkins, Sequoia and then venture capital firms will have access to many semiconductor companies based in Santa Clara Valley as well as early computer companies using their devices and their programs and services.
Throughout the 1970s, a group of private equity firms, focusing primarily on venture capital investment, will be established which will become a model for venture capital firms and leveraged leveraged firms. In 1973, with the number of new venture capital firms increasing, leading venture capitalists formed the National Venture Capital Association (NVCA). NVCA is to serve as an industry trade group for the venture capital industry. Venture capital firms experienced a temporary decline in 1974, when the stock market fell and investors were naturally wary of this new type of investment fund.
Only in 1978 venture capital experienced the first major raising year, because the industry collected about $ 750 million. With the passage of the Employees Retirement Income Law (ERISA) in 1974, corporate pension funds were banned from holding certain risky investments including many investments in private companies. In 1978, the US Department of Labor loosened certain restrictions of ERISA, under "prudent rules," allowing corporate pensions to invest in asset classes and providing the main source of capital available to venture capitalists.
1980s
The public success of the venture capital industry in the 1970s and early 1980s (for example, Digital Equipment Corporation, Apple Inc., Genentech) led to a large proliferation of venture capital investment firms. Out of only a few dozen companies early in the decade, there were over 650 companies in the late 1980s, each looking for the next major "home run". The number of companies doubled, and the capital managed by these companies increased from $ 3 billion to $ 31 billion over the decade.
Industrial growth is hampered by sharply declining returns, and certain venture firms start posting losses for the first time. In addition to increased competition among corporations, several other factors influence reciprocity. The market for an initial public offering cooled in the mid-1980s before collapsing after the stock market crash in 1987, and foreign firms, mainly from Japan and Korea, flooded early-stage companies with capital.
In response to changing circumstances, companies that have sponsored the company's investment forces, including General Electric and Paine Webber, sold or closed these venture capital units. In addition, venture capital units in Chemical Bank and Continental Illinois National Bank, among others, begin to shift their focus from early-stage corporate funding to investment in more mature companies. Even founder of industry J.H. Whitney & amp; The Company and Warburg Pincus began transitioning to purchases with leverage and growth capital investment.
Venture capital boom and Internet Bubble
In the late 1980s, the return on venture capital was relatively low, especially when compared to increased cousin purchases, in part due to competition for hot startups, oversupply of IPOs and the experience of many venture capital fund managers. Growth in the venture capital industry remained limited throughout the 1980s and the first half of the 1990s, up from $ 3 billion in 1983 to more than $ 4 billion more than a decade later in 1994.
After the scattering of venture capital managers, more successful companies quit, focusing more on improving operations in their portfolio companies than continuing to make new investments. The result will start to change very interesting, successful and ultimately will result in a boom in venture capital in the 1990s. Yale School of Management Professor Andrew Metrick refers to the first 15 years of the modern venture capital industry that began in 1980 as a "pre-boom period" to anticipate the explosion that began in 1995 and last through the burst of the Internet bubble in 2000.
The late 1990s were a booming time for venture capital, as companies at Sand Hill Road in Menlo Park and Silicon Valley benefited from a huge surge of interest in the newborn Internet and other computer technologies. Initial public offerings of stocks for technology and other growth companies are abundant, and venture firms earn great results.
Personal equity accidents
The Nasdaq crash and technological downturn that began in March 2000 shook nearly the entire venture capital industry as a valuation for startup technology companies collapsing. Over the next two years, many venture firms have been forced to wipe out most of their investments, and many funds are significantly "under water" (the investment value of funds is below the amount of invested capital). Venture capital investors seek to reduce the size of commitments they make to venture capital funds, and, in many instances, investors seek to dismantle the existing commitments to pennies on the dollar in the secondary market. By mid 2003, the venture capital industry had shrunk to about half its capacity in 2001. Nevertheless, the MoneyTree PricewaterhouseCoopers' Survey showed that the total venture capital investment remained stable from 2003 to the second quarter of 2005.
Although the post-explosive years represented only a fraction of the peak rates of business investment achieved in 2000, they still represent an increase in investment rates from 1980 to 1995. As a percentage of GDP, business investment was 0.058% in 1994, peaking at 1,087% (nearly 19 times the rate of 1994) in 2000 and ranging from 0.164% to 0.182% in 2003 and 2004. The Internet-driven Internet upsurge of 2004 to 2007 helped to revive the venture capital environment. However, as a percentage of the overall private equity market, venture capital still has not reached the level of the mid-1990s, let alone the peak in 2000.
The venture capital fund, which was responsible for many fund-raising volumes in 2000 (the peak of the dot-com bubble), generated only $ 25.1 billion in 2006, a 2% decline from 2005 and a significant drop from its peak.
Maps Venture capital
Funding
Obtaining venture capital is substantially different from raising a debt or loan. The lender has the legal right to withdraw the loan and the repayment of capital regardless of the success or failure of the business. Business capital is invested in exchange for equity shares in the business. The return of venture capitalists as shareholders depends on the growth and profitability of the business. This return is generally obtained when the venture capitalist "goes out" by selling his shareholdings when the business is sold to other owners.
Venture capitalists are usually very selective in deciding what to invest, with Stanford's survey of venture capitalists revealing that 100 companies are considered for every company that receives financing. Businesses receiving financing should demonstrate excellent management teams, large potential markets, and most importantly high growth potentials, since only such opportunities are likely to provide successful financial returns and outsets within the required timeframe (usually 3- 7 years) venture capitalists hope.
Because investments are illiquid and require extended time frames to be harvested, venture capitalists are expected to conduct detailed due diligence before investments. Venture capitalists are also expected to cultivate the firms in which they invest, to increase the likelihood of reaching the IPO stage when valuations are favorable. Venture capitalists usually help in four stages in the development of the company:
- Creation of ideas;
- Beginning;
- Uphill; and
- Sign out
Since there is no public market listing their securities, private companies meet with venture capital firms and other private equity investors in several ways, including warm referrals from investors' trustworthy sources and other business contacts; conferences and symposiums of investors; and the peak in which the company pitches directly to the group of investors in face-to-face meetings, including a variant known as "Speed ​​Mover", which is similar to a quick calendar for capital, in which the investor decides in 10 minutes whether he wants a follow-up. In addition, several new private online networks appear to provide additional opportunities for meeting investors.
The need for high returns makes business finance an expensive source of capital for companies, and best suited to businesses with large face-to-face requirements, which can not be financed by cheaper alternatives such as debt. It is most common in intangible assets such as software, and other intellectual property, whose value has not been proven. In turn, this explains why venture capital is most prevalent in technology and life sciences that grow fast or the field of biotechnology.
If the company has qualities sought by venture capitalists including strong business plans, good management teams, investments and the spirit of the founders, a good potential to get out of investment before the end of their funding cycle, and a minimum return target that exceeds 40% per year, it would be easier to increase venture capital.
Financing stages
There are usually six rounded venture financing stages offered at Venture Capital, which are roughly in line with the company's developmental stages.
- Seed financing: The earliest set of financing is needed to prove new ideas, often provided by angel investors. Crowdfunding equity also emerged as an option for initial funding.
- Start-up: a start-up company that requires funding for costs associated with marketing and product development
- Growth (Series A round): Initial sales and manufacturing funds. This is usually where the VC enters. Series A can be considered the first institutional round. The next investment cycle is called Series B, Series C and so on. This is where most companies will experience the greatest growth.
- Second Round: Working capital for early stage companies selling products, but not yet making a profit. It can also be called Series B rounds and so on.
- Expansion: Also called Mezzanine financing, this is money expansion for profitable new companies
- Exit from venture capitalists: VCs may opt out through secondary sales or IPOs or acquisitions. Initial VCs can come out in the next round when new investors (VC or Private Equity investors) buy shares from existing investors. Sometimes a company very close to an IPO can allow some VCs to get out and otherwise new investors may come in hopes of benefiting from an IPO.
- Bridge Financing is when a startup seeks funding between full VC rounds. The goal is to collect a smaller amount of money than the full round and usually the existing investors participate.
Between the first round and the fourth round, a venture-backed company may also seek to take on a business debt.
Company and funds
Venture Capitalist
A venture capitalist is a person who makes a business investment, and these venture capitalists are expected to bring in managerial and technical expertise and capital for their investment. Venture capital funds refer to joint investment vehicles (in the United States, often LP or LLC) that primarily invest in third party investor financial capital in companies that are too risky for standard capital markets or bank loans. These funds are typically managed by venture capital firms, often employing individuals with technological backgrounds (scientists, researchers), business training and/or in-depth industry experience.
The core skills in VCs are the ability to identify new or disruptive technologies that have the potential to generate high commercial returns at an early stage. By definition, VCs also take a role in managing entrepreneurial companies in the early stages, thus increasing the skills and capital, thus differentiating VC from buying private equity, which usually invests in companies with proven revenues, and thus potentially manifests much higher. rate of return. Inherent in realizing an abnormally high rate of return is the risk of losing all of a person's investment at a given startup company. As a result, most venture capital investments are conducted in a pool format, in which some investors combine their investments into one large fund that invests in many different startup companies. By investing in a pool format, investors are spreading their risk to many different investments rather than taking the opportunity to put all their money in a newly established company.
Structure
Venture capital firms are usually structured as partnerships, general partners who serve as corporate managers and will serve as investment advisers for venture capital funds. A venture capital company in the United States can also be structured as a limited liability company, in this case a company manager known as a member of a manager. Investors in venture capital funds are known as limited partners. This constituency consists of individuals and institutions of high-value-net with a large number of available capital, such as state and private pension funds, university financial grants, foundations, insurance companies, and combined investment vehicles, called funding.
Type
Venture capitalist companies differ in their motivations and approaches. There are several factors, and every company is different.
Some of the factors that influence the VC's decision include:
- Business situation: Some VCs tend to invest in new, troubling ideas, or startups. Others prefer to invest in established companies that need support to go public or grow.
- Some invest only in certain industries.
- Some prefer to operate locally while others will operate nationally or even globally.
- VC expectations often vary. Some may want a faster public sale from a company or expect rapid growth. The amount of assistance VCs can provide varies from one company to the next.
Role
In the venture capital industry, general partners and other investment professionals of venture capital firms are often referred to as "venture capitalists" or "VCs". A typical career background varies, but, in general, venture capitalists come from an operational or financial background. Venture capitalists with operational background (operating partners) tend to be former founders or corporate executives similar to those who finance partnerships or will serve as management consultants. Venture capitalists with a financial background tend to have a banking investment or other company's financial experience.
Although the title is not entirely uniform from company to company, other positions in venture capital firms include:
Fund structure
Most venture capital funds have a fixed age of 10 years, with the possibility of several years of extension to allow private companies to still seek liquidity. The investment cycle for most of the funds is generally three to five years, after which the focus is on managing and making continued investment in the existing portfolio. This model was pioneered by successful funding in Silicon Valley during the 1980s to invest in broad technology trends but only during their upgrading periods, and to reduce management and marketing risks from any company or product.
In such funds, investors have a fixed commitment to funds that were initially unfunded and then "summoned" by venture capital funds over time when the fund invests. There is substantial penalty for limited partners (or investors) who fail to participate in capital calls.
It takes about a month to several years for venture capitalists to raise money from limited partners for their funds. By the time all the money has been raised, the funds are said to be closed, and 10 years of life begins. Some funds have been partially closed when one half (or some other amount) of the funds have been raised. The vintage year generally refers to the year in which funds are closed and can serve as a means to stratify VC funds for comparison. This shows the difference between the venture capital fund management company and the venture capital fund managed by them.
From an investor's point of view, funds can be: (1) traditional - where all investors invest on the same terms; or (2) asymmetric - where different investors have different provisions. Usually asymmetry is seen in cases where there are investors who have other interests such as tax revenues in the case of public investors.
Compensation
Venture capitalists are compensated through a combination of management fees and carrying interest (often referred to as "two and 20" arrangements):
Because funds can run out of capital before the end of their life, larger venture capital firms usually have some overlapping funds at the same time; this allows larger companies to retain specialists in all stages of enterprise development that are almost always involved. Smaller companies tend to thrive or fail with their initial industry contacts; at a time when funds are flowing out, next-generation technology and completely new people are up, whose common partners may not know it well, so it's wise to reassess and shift the industry or personnel rather than trying to just invest more in the industry or people that are already known partners.
Alternative
Due to the stringent requirements that venture capitalists have for potential investments, many entrepreneurs seek seed funding from angel investors, who may be more willing to invest in high speculative opportunities, or may have previous relationships with employers.
In addition, many venture capital firms will only seriously evaluate investments in startups or unfamiliar if the company can prove at least some of its claims about the technology and/or market potential for its products or services. To achieve this, or even just to avoid the dilutive impact of receiving funding before such claims are proven, many beginners seek to self-finance sweat equity until they reach a point where they can credibly approach external capital providers such as venture capitalists or investors angel. This practice is called "bootstrapping".
Crowdfunding equity emerges as an alternative to traditional venture capital. Traditional crowdfunding is an approach to increasing the capital needed for a new project or company by attracting large numbers of ordinary people for small donations. While such an approach has a long-standing precedent within the scope of charity, it receives new attention from entrepreneurs, now that social media and online communities make it possible to reach a group of potentially interested supporters at very low costs. Some equity crowdfunding models are also applied specifically for startup funding, such as those listed in the Comparison of the crowd funding services. One reason for looking for venture capital alternatives is the problem of traditional VC models. The traditional VCs shift their focus to next-stage investments, and the return on investment of many VC funds has been low or negative.
In Europe and India, Media for equity is a partial alternative to venture capital funding. Media for equity investors can provide start-ups with advertising campaigns that are often significant in return for equity. In Europe, investment advisory firms offer young businesses the option to exchange equities for service investments; Their goal is to guide businesses through the development stage to gain significant funding, mergers and acquisitions, or other exit strategies.
In industries where assets can securitize effectively because they can reliably generate future income streams or have good potential for resale in the case of foreclosures, businesses may be cheaper to increase the debt to finance their growth. A good example would be an asset-rich extractive industry such as mining, or manufacturing industry. Offshore funding is provided through the special confidence of venture capital, which seeks to use securitization in the structuring of multi-market hybrid transactions through SPV (special purpose vehicles): corporate entities designed solely for financing purposes.
In addition to the traditional venture capital and angel networks, groups have emerged, allowing small groups of investors or entrepreneurs themselves to compete in a privatized business plan competition in which the group itself serves as an investor through a democratic process.
Law firms are also increasingly acting as an intermediary between clients seeking venture capital and the companies that provide them.
Other forms include business resources that seek to provide non-monetary support to launch new ventures.
Social impact
Venture capital is also linked to job creation (accounting for 2% of US GDP), knowledge economy, and is used as a measure of proxy for innovation in economic or geographic sectors. Every year, there are nearly 2 million businesses made in the US, and 600-800 get venture capital funding. According to the National Capital Capital Association, 11% of private sector jobs are from venture-backed companies and venture-backed venture accounts for 21% of US GDP.
Diana's report from Babson College found that the number of female partners in VC firms declined from 10% in 1999 to 6% in 2014. The report also found that 97% of VC-funded businesses have male chief executives, and that businesses with all male teams were more than four times more likely to receive VC funds than teams with at least one woman. More than 75% of VC firms in the US do not have venture capitalists at the time they were surveyed. It was found that most VC companies never had a woman who represented them on the board of one of their portfolio companies. By 2017, only 2.2% of all VC funds are granted to women founders.
In comparison, the UC Davis study focusing on large public corporations in California found 49.5% with at least one female council seat. When the results were last published, some readers of San Jose Mercury News dismissed the possibility that sexism was the cause. In the follow-up article of Newsweek, Nina Burleigh asked "Where are all these offended people when women like Heidi Roizen publish accounts have a venture capitalist who put his hands on his trousers under the table while the deal is being discussed?"
Geographic differences
Venture capital, as an industry, comes from the United States, and American companies have traditionally become the largest participants in business transactions with large amounts of venture capital deployed in American companies. However, more and more, non-US business investment is growing, and the number and size of non-US venture capitalists has grown.
Venture capital has been used as a tool for economic development in various developing regions. In many of these areas, with the underdeveloped financial sector, venture capital plays a role in facilitating access to financing for small and medium enterprises (SMEs), which in most cases are not eligible to receive bank loans.
In 2008, while VC funding was still dominated by US money ($ 28.8 billion was invested in over 2,550 transactions in 2008), compared to international fund investments ($ 13.4 billion invested elsewhere), there has been a flat growth at 5% in venture capital transactions outside the US, especially in China and Europe. Geographical differences can be significant. For example, in the UK, 4% of UK investment goes into venture capital, compared to about 33% in the US.
United States
Venture capitalists invested $ 29.1 billion in 3,752 transactions in the US through the fourth quarter of 2011, according to a report from the National Venture Capital Association. The same figure for all of 2010 was $ 23.4 billion in 3,496 transactions.
According to a report by Dow Jones VentureSource, venture capital funding fell to $ 6.4 billion in the US in the first quarter of 2013, a decline of 11.8% from the first quarter of 2012, and a 20.8% drop from 2011. Venture companies have added $ 4, 2 billion into their funds this year, down from $ 6.3 billion in the first quarter of 2013, but up from $ 2.6 billion in the fourth quarter of 2012.
Mexico
The Venture Capital Industry in Mexico is a fast-growing sector in a country that, with the support of institutions and private funds, is estimated to reach US $ 100 billion invested in 2018.
Israel
In Israel, high-tech entrepreneurship and venture capital have grown far beyond the relative size of the country. Because it has very little natural resources and, historically has been forced to build its economy on a knowledge-based industry, the VC industry has grown rapidly, and currently has about 70 active venture capital funds, of which 14 are VC international with Israeli offices, and an additional 220 international funds actively investing in Israel. In addition, in 2010, Israel led the world in venture capital invested per capita. Israel attracted $ 170 per person compared to $ 75 in the United States. About two-thirds of the funds invested come from foreign sources, and the rest from within the country. In 2013, Wix.com joins the other 62 Israeli companies on the Nasdaq. Read more about Venture capital in Israel.
Canada
The Canadian technology company has attracted interest from the global venture capital community partly because of the generous tax incentives through the investment tax credit program of Experimental Research and Development (SR & amp; ED). Basic incentives available to any Canadian company that performs R & D D is a refundable tax credit equivalent to 20% of eligible "R & amp; D" expenses (labor, material, R & D, and R & D contracts). The refundable 35% tax credit is available to certain Canadian-controlled (CCPC) private companies. Because the CCPC rules require a minimum of 50% of Canadian ownership in companies that do R & amp; D, foreign investors looking to benefit from a larger 35% tax credit should accept a minority position in the company, which may be undesirable. SR & amp; ED does not limit any technology or intellectual property exports that may have been developed with SR & ED tax incentive benefits.
Canada also has a fairly unusual form of venture capital in its corporation, Venture Capital Corporations (LSVCC). These funds, also known as Venture Capital Retail or Friendlier Investment Fund (LSIF), are generally sponsored by unions and offer tax breaks from the government to encourage retail investors to purchase the funds. Generally, Venture Capital Retail funds are only investing in companies where the majority of employees are in Canada. However, innovative structures have been developed to enable LSVCCs to direct subsidiaries in Canada incorporated in jurisdictions outside Canada.
Switzerland
Many new companies in Switzerland are universities, mainly from federal technology institutes in Lausanne and Zurich. According to a study by the London School of Economics analyzing 130 ETH Zurich spin-offs over 10 years, about 90% of these start-ups survived the first five critical years, generating an annual IRR averaging over 43%. The most active Swiss early-stage investors are The Zurich Cantonal Bank, investiere.ch, Swiss Founders Fund, as well as a number of angel investor clubs.
Europe
Europe has a large and growing number of active venture firms. Capital raised in the region in 2005, including purchase funds, exceeded EUR60 billion, of which EUR12.6 billion was specifically allocated for business investment. The European Investment Trade Association has a list of active member companies and industry statistics.
European venture capital investment in 2015 increased by 5% year-on-year to EUR3.8 billion, with 2,836 companies supported. The amount invested increased at all stages led by seed investments with an 18% increase. Most of the capital is concentrated in life sciences (34%), computers & amp; the consumer electronics sector (20%) and communications (19%), according to Invest Europe's annual data.
In 2012, in France, according to research by AFIC (Association of French VC Companies), EUR6.1B has been invested through 1,548 transactions (39% in new companies, 61% in new rounds) by companies such as Partech Ventures or Innovacom.
A study published in early 2013 showed that contrary to popular belief, European startups supported by venture capital do not perform worse than their US counterparts. Venture-backed European companies have equal opportunities for listing on the stock market, and opportunities are slightly lower than "trading sales" (acquisitions by other companies).
Leading early-stage venture capital investors in Europe included Mark Tluszcz from Mangrove Capital Partners and Danny Rimer of Index Ventures, both named on Midbes List of Magazine's Forbes magazine of the world's largest deal maker in venture capital technology in 2007.
Asia
India is rapidly pursuing the West in the field of venture capital and a number of venture capital funds are present in the country (IVCA). In 2006, the total amount of private equity and venture capital in India reached $ 7.5 billion in 299 transactions. In the Indian context, venture capital consists of investments in equity, quasi-equity, or conditional loans to promote unregistered, high-risk, or high-tech firms powered by qualified or technically qualified entrepreneurs. It is also used to refer to investors "providing seeds", "start-ups and first-stage financing", or finance companies that have demonstrated tremendous business potential. Venture capital refers to capital investment; equity and debt, both carry an undeniable risk. The risks anticipated are very high. The venture capital industry follows the concept of "high risk, high return", innovative entrepreneurship, knowledge-based ideas, and human capital-intensive enterprises have taken the lead position when venture capitalists invest in risky finances to foster innovation.
China has also begun developing the venture capital industry (CVCA).
Vietnam is experiencing its first foreign venture capital, including IDG Venture Vietnam ($ 100 million) and DFJ Vinacapital ($ 35 million)
Singapore is widely recognized and featured as one of the hottest places to start and invest, primarily because of its healthy ecosystem, its strategic location and connected with overseas markets. With 100 transactions worth US $ 3.5 billion, Singapore records the value of PE and VC investments by 2016. Total PE and VC investments have increased substantially over the last 5 years: In 2015 Singapore accounted for 81 investments with US aggregate value. $ 2.2 billion while in 2014 and 2013, the value of PE and VC transactions amounted to US $ 2.4 billion and US $ 0.9 billion, respectively. By 53 percent, technology investment accounts for most of the transaction volume. In addition, Singapore is home to the two largest unicorns in Southeast Asia. Garena is reportedly the highest-rated unicorn in the region with a price tag of $ 3.5 billion, while Grab is the most funded, having collected a total of US $ 1.43 billion since its inception in 2012. Start-ups and small businesses in Singapore receive support from policy makers and local governments to encourage the role of VCs to support entrepreneurship in Singapore and the region. For example, in 2016, the National Research Foundation of Singapore (NRF) has granted up to about $ 30 million to four large local companies for investments in pioneering companies in the city state. The first of its kind incoming NRF collaboration is designed to encourage these firms to be a source for new technologies and innovative business models. Currently, the rules governing the VC company are being reviewed by the Monetary Authority of Singapore (MAS) to facilitate manage funds and increase funding opportunities to start. This primarily includes simplifying and shortening authorization processes for new venture capital managers and to learn whether existing incentives that have attracted traditional asset managers here would be appropriate for the VC sector. A public consultation on the proposal was held in January 2017 with the changes expected to be introduced in July.
Middle East and North Africa
The Middle East and North Africa venture capital industry (MENA) is an early stage of development but growing. The MENA's Personal Equity Association Guild to Venture Capital for entrepreneurs enrolls VC companies in the region, and other resources available in the MENA VC ecosystem. Diaspora TechWadi organization aims to give MENA company access to US-based VC investors.
Sub-Saharan Africa
South Africa's venture capital industry is growing. The South African Government and Revenue Service are following the international trend of using tax-efficient vehicles to boost economic growth and job creation through venture capital. Section 12 J of the Income Tax Act was updated to include venture capital. Companies are allowed to use an efficient tax structure similar to VCT in the UK. Despite the above structure, the government needs to adjust its rules around intellectual property, exchange controls and other laws to ensure that venture capital succeeds. & lt; www.savca.co.za & gt;
Currently, there are not many venture capital funds in operation and it is a small community; But the number of venture funds continues to rise with new incentives slowly coming from the government. Funds are hard to come by and because of limited funding, firms are more likely to receive funding if they can show early sales or significant attractiveness and growth potential. The vast majority of venture capital in Sub-Saharan Africa is based in South Africa and Kenya.
Confidential information
Unlike public companies, information about business entrepreneurs is usually confidential and exclusive. As part of the due diligence process, most venture capitalists will need significant details in relation to the company's business plan. Employers should remain vigilant about sharing information with venture capitalists who become investors in their competitors. Most venture capitalists treat information in confidence, but as a matter of business practice, they usually do not enter into the Disclosure Agreement Not because of the potential responsibility issues generated by the agreement. Employers are usually advised to protect intellectual property that actually belongs.
The limited partner of a venture capital firm typically has only access to limited amount of information in respect of each portfolio company in which they are invested and is usually bound by the confidentiality provisions of the limited funding partnership agreement.
Government regulation
There are some strict guidelines that govern those who deal with venture capital. That is, they are not permitted to advertise or solicit business in any form under the guidelines of the Securities and Exchange Commission.
In popular culture
In books
- Novel Mark Coggins Vulture Capital (2002) features a venture capitalist protagonist investigating the loss of a chief scientist at a biotech firm in which he has invested. Coggins also works in industry and co-founder of dot-com startup.
- Describing his experience as a reporter covering technology for the New York Times, Matt Richtel produces the Hooked novel (2007), in which the main character action has ended boyfriend, a venture capitalist Silicon Valley, plays a key role in the plot.
- Good, detailed work on VC funding methods.
In the comics
- In the comic strip of Dilbert, the character named "Vijay, the world's most desperate venture capitalist" often makes an appearance, offering money bags to anyone even with little potential. In one strip, he offers two small children with good money math values ​​based on the fact that if they marry and produce a baby engineer, he can invest in the baby's first idea. The children replied that they had been looking for mezzanine funding.
- Robert von Goeben and Kathryn Siegler produced a comic strip titled The VC between 1997 and 2000 that parodied industry, often by showing a funny exchange between venture capitalists and entrepreneurs. Von Goeben was a partner at Redleaf Venture Management when he started writing strips.
In the movie
In the Wedding Crashers (2005), Jeremy Gray (Vince Vaughn) and John Beckwith (Owen Wilson) are bachelors who make appearances to play at different weddings from strangers, and large part of the film follows them posing as venture capitalists from New Hampshire.On television
- In the Dragons' Den TV series, startup companies are installing their business plan to the venture capitalist panel.
- In the reality television show ABC Shark Tank , venture capitalists ("Shark") listen to the entrepreneur's poet and choose which investment they will invest.
- The short-lived Bravo reality reality show Start-Up: Silicon Valley gets participation from venture capitalists in Silicon Valley.
- Sitcom Silicon Valley parodies startup companies and venture capital cultures.
See also
Notes and references
Source of the article : Wikipedia
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