Venture capital is a type of private equity investment provided to early stage, start-up businesses with little or no operating history.
Background to venture capital investment
Why seek investment?
Businesses that seek venture capital investment are generally too small to raise capital in the public markets and are unable to secure debt finance.
The combination of a lack of operating history and, in many cases, an unproven business model underpinned by untested technology, makes investing in such businesses a high-risk strategy.
Investors interested in these types of businesses will usually bring technical, as well as managerial, expertise to the management team. However, they will look to make high rates of return on their investments because of their high-risk nature.
Types of investment and investors
There are different phases of venture capital investment, depending largely upon the stage of the investee company’s development and the level of investment required.
First round investment in very early-stage businesses, or seed capital investment, is usually confined to family and friends of management, as well as business angels.
Second and subsequent rounds of investment,
Access this content for free with a 7 day trial of LexisNexis and benefit from:
- Instant clarification on points of law
- Smart search
- Workflow tools
- 42 practice areas
Get your quote today and take step closer to being able to benefit from:
- Instant clarification on points of law
- Smart search
- Workflow tools
- 36 practice areas
Get a LexisNexis quote
* denotes a required field
To view the latest version of this document and thousands of others like it,
sign-in with LexisNexis or register for a free trial.
Powered by Lexis+®
Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Venture capital definition
What does Venture capital mean?
The term given to early-stage investments.
CONTACT US
