Venture capital

Investors, public, institutions will be on their foot to pool their money as investments on any developed corporate and well established firms/companies for any cause, because risk is low and return will be appreciable as developed corporate and well established firms/companies will own good profitability and influence towards success.  For the same cause will any individual or institution be ready handed to help start- ups? Yes, we are ready says venture capitalists.

Today’s trend is being altered more by start-ups than by corporate. People with fresh ideas and energetic minds enter the entrepreneur environment to serve people and their own passion. Seeds have to be treated with water to initiate growth. Ideas and passion has to be funded with droplets of money to initiate start ups, termed as Seed funding. Seed funding is delivering financial help to the needy until the company itself is able to generate good amount of cash. Seed funding is done by either individuals or institutions but with a good security in return. Seed funding is done up to a maximum amount of hundreds of thousands (dollars) . In some countries seeds are funded by government also.

Beyond a limit, seed funding have to be replaced by venture capitalists. Venture capitalists will fund start-ups in different layers. First layer is meant as Series A round, preferred stocks will be distributed for venture capitalists in return for capital. Venture capitalists would pour maximum of $10 million and gain shares worth respective to the amount poured. Series A round would support company for its manufacturing and sales expenses. Second round of funding would be to satisfy the thirst for working capital needs.

Furlenco, a startup into furniture retail raised Rs.38crore in Series A funding which exchanged 47% of shares to investors. The downside for entrepreneurs is that venture capitalists would involve in decision making. Venture capitalists today are curious enough to catch the golden fishes as young as possible which may help them to feed monetarily as well as informatively.

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