Venture

If you are turned down by banks and not managed to get help from other financial institutions, where would you go?

If there is an intelligent mind finding a new device, such as a general-purpose computer that is small, light easy to use, and then want to create a company that manufactures computers it what should he do? He can go to the bank to ask for credit. But it turns out that banks ask for collateral not owned. In addition, many banks requirements are not met. Where should he go? He can sell his invention to a wealthy businessman and he got the money. But it was only obtained. Instead the rich businessman was able to create a new computer-producing industry findings. Industry was then developed. Who is the most profitable?

Facing such symptoms, on the initiative of a number of people, born lelmbaga financing without collateral who dare to take risks, which is called the Venture Capital Company. With the financial institution is the inventor can come to the company and the venture capital provider for help. The assistance can be in the form of capital or funding. Venture capital firms that after seeing the results of his findings would argue that it is a result of the discovery of new goods to be sold are marketed. That's why venture firms wanted to help.

Big Risks

After that there will be negotiations between the inventor with venture capital firms. They agreed to set up a company. Dare venture capital firms provide start-up capital in the form of funds sufficient Yag while the inventor gives an invention as an investment. Stock split 85% for venture capital firms and 15% for the inventor. After five years of venture capital company shares will be sold gradually to the inventor with certain premium plus an annual dividend, so that eventually one day the finder will have the entire company. Such a form of cooperation established venture capital. Form of cooperation that can be assorted with diverse requirements. The difference with the bank is a venture capital firm does not ask for collateral, because the high risks it faces. Because of this high resoko venture capital firms ask high.Therefore reward venture capital requirements are usually heavy. Negotiations usually run hard. Because venture capital firms do not want to lose money, because it demands the cooperation proposals examined in depth. While the inventor also think a thousand times that if the company later evolved not annexed by venture capital firms.

Venture capital is critical views of functions. Many companies are successfully developed with the help of venture capital. But the venture capital firm that also worked very carefully. Because in a lot of people a great idea and brilliant minds that should be developed. Many amazing new discoveries. But it's important to venture capital firms is whether it's a brilliant idea and if financed invention can provide a profit? On the other hand the inventor should have a basic knowledge of the company before he had the initiative to develop the invention commercially. If he wants to propose a project to the venture capitalists he should be able to explain how established companies looking to form joint venture capitalists, marketing. development at a later date and that it is important how the help of venture capitalists will be returned.

In addition to the discovery of new finance, venture capital firms are also willing to help a company that has gone the way. For example, a good company but a shortage of working capital or good companies that lack of funds and so on. The venture capitalists who want to very select projects they finance. Usually they are more interested in manufacturing projects are projects that produce the goods. They are not so interested in the project services, such as transportation on a potential new area, restaurant or retail goods. In America most of the selected projects are projects in electronics, high technology, biotechnology and medical devices. Why is that? Due to manufacturing project more clearly so that the venture capitalist growth can quickly decide when they can finish work together. If the company that aided're lucky, venture capitalists will sell sahamnyha with high premium, then look for a new project. Meanwhile, if the company is not successful, venture capitalists may propose settlement, such as selling the company concerned or liquidation.

Nike and Apple birth of venture capital

About fourty years  ago in America grew from venture capital groups private businessman. Basically they are the venture capitalists. They do a selection of tens of thousands of the proposed setting up a business, such as computers, biotechnology and health care ultra modern. This venture capitalism exploded from the end of 1979 and the early 1980s and attracted the attention of the professionals in the field of business. For example in 1979, the venture capital firm in San Francisco called Kleiner Perkins Caufield & Byers staked U.S. $ 200,000 in a small biotechnology company called Genentech. When Genentech sold shares in 1981, the original stock price quickly rose $ 35 to U.S. $ 80 per share. Kleiner Perkins investment return with value eight hundred times. However, the failure also been experienced. For example, a company that received capital assistance venura, Osborne Computer, loss of U.S. $ 18,000,000 and only gets hit in 1983 after a management overhaul. Pizza Time Theatre fall bankrupted and forced through the court with a loss of U.S. $ 100 million more. However, other profitable projects encourage venture capitalists to continue its operations. The advantage can be 25% compound interest, so the story of the failure is usually quickly disappear, while successfully expanding into tales that are told. Many companies in the U.S. that started with venture capital and is now a part of American life such as Nike, Hagen Dasz and People Express. Meanwhile, Apple is also built with venture capital and sell shares on the stock over the counter, now become an international company. People are usually less well-known within the scientific community. Such as Arthur Rock, who was sixty years earlier. He is a venture capitalist who, among others, finance Fairchild Semiconductor, which has become a conglomerate Teledyne in California and Diasonics that produce medical devices. People Express was once a capital gain of William Hambrecht, a venture capitalist from San Francisco. He also financed some of Silicon Valley companies like Convergent Technologies that makes computer software.

Ventura on a pension

Club venture models arising in 38 American states. The small-time investors who want to participate in the venture capital game, held a luncheon meeting to invest around U.S. $ 10,000 per project or more. The participants were given the opportunity five minutes to decide in favor of a project. There is also a venture capital meeting the more rigorous. There are a number of states are investing venture capital firm of drawing including Indiana, Connecticut and Colorado. The amount of capital which meant covering more than U.S. $ 1 billion. University of Utah engineering company supports over 25 bioengineering, including Symbion, a company that produces the Jarvik-7 artificial heart. Time in America there are about five hundred venture capital firms, which combined form and invest in a large number of projects worth billions of dollars. Capital is no longer owned by venture capitalists, but from pension institutions, financial institutions and wealthy individuals who entrust their money. Venture capital firms have asked the management costs of the source of funding of between 2% - 3%. If the project is aided gets hit, they will get a share of 20%. Many banks in the United States who now form a subsidiary company engaged in the field of venture capital. Large companies bleak Ford Motor, Monsanto, Xerox and AT & T are now also involved in the venture capital business. Dikaakan that the venture capital industry is now the capital shower. Most of the venture capital activity centered on activities such technology in Silicon Valley, California, along the coast line between Baltimore and Philadelphia and in technology zones around Denver and Colorado Springs. With the proposer businessman near their venture capitalists may find the idea at an early proponent. Besides the venture capitalist likes to gather to exchange tips and talk nisnis.

Not thrive outside the United States

The webs are so vast and the other between the inventors and investors, it can not flourish in a country outside the United States judgments. In Germany, financial institutions are conservative and which controls the capital market and money market, rather than the banks lend money through participating in the venture capital business. As a result, a small company in Germany when the life of bank credit in the second round of credit may fall in the hands of the bank. In France, major companies are now controlled by the government do not seem too interested in the venture capital business. In Japan, banks are able to turn famous export, prefer to invest in drawing this giant company that has been running strong. They do not encourage entrepreneurs through venture capital. In other countries in East Asia, investors would prefer to play the land and the building and did not want to give aid to the unsecured high risk. Only in the UK, with the encouragement of PM, American-style venture capital can be sufficiently developed. Four years ago seventy members of the British Venture Capital Association, infuse U.S. $ 412 million through venture capital. A year later that number increased to approximately U.S. $ 525 million. But an accountant stating that the venture capital industry in America has been more ripe and running away, while in Europe people still belajar.Sementara that many rich people from outside the U.S. to invest in venture capital in America. According to the Journal of Venture Capital invested U.S. $ 19,600,000,000 in the form of venture capital until 1986, approximately U.S. $ 3,000,000,000 is entrusted capital from abroad. According to a venture capital firm mostly monthly meetings are meetings with people overseas who want to invest in venture capital in America. A venture capital firm other states, pounding on the door as if to collapse in investment demand from abroad.

Courage aside

Another reason why people in the country want to buddy venture capital firms in the United States is high skill in setting aside the bad project. These skills are difficult to obtain in other countries. Stanley Golder tells that the venture capital lallu Golden, Thomas & Cressey tells that in 1999 the company should consider a new idea that was rejected 1,200 in one hour. Finally the only company selected six new idea. For projects that infuse its U.S. $ 8,700,000. Venture capital firms are now deepening its reach. If necessary they will incorporate new management, providing advice and marketing operations and provide additional capital if necessary. For if his efforts fail, he will swallow the bitter result. According to a study, usually a new venture will achieve results after changing two to three times the leadership. Sometimes venture capitalists themselves will intervene. Arthur Rock is known as a venture capitalist in 1983 Diasonics help managers get out of financial trouble with the reorganization.

Today

Later, the venture capital industry in the U.S. is rather loose. After peaking venture capital investment in 1983 reached U.S. $ 3,400,000,000, next year that figure fell to U.S. $ 2,600,000,000 that show too cautious attitude. More and more venture capital is used to finance a company that has gone the way, shows venture capitalists are less willing to take risks. However, among other states, optimism that venture capital will show new results. Successful venture capital support efforts to make new anticancer drugs, the manufacture of synthetic insulin, other medications and hormonal disease that accelerates the growth of hybrid plants. Born on computer super computer that could replace the main frame by means of a small size that can be placed on the table. The project was financed with venture capital.