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Towards a global model of venture capital - Book Report/Review Example

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The success that the venture capital firms have enjoyed over the previous decade has set a general tempo for this mode of business to be replicated on the global platform (Megginson 35). The firms have various ways of raising the necessary investment capital. In most cases, the…
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Towards a global model of venture capital
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Download file to see previous pages Venture capitalism has been traditionally associated with the US and European financial markets where they have immensely contributed to job creation and generated high volumes of revenues. In the US alone, a survey by the National Venture Capital Association estimates that the companies now employ close to 7.6 million Americans. This paper tries to decipher the technical terminologies that are usually associated with venture capitalism with a view of making them simpler and easy to understand. The paper will also rely on results of economic studies that have been conducted on venture capitalism to try and put into perspective the potential of this industry to drive the global investment growth.
There are various types of venture capitalists. The most notable ones are the institutional venture capital companies, and the other is what is called the Angel capitalists. The institutional venture capital companies are formal businesses, which conduct their businesses in a professional manner. They seek out and fund business ventures that look promising. On the other hand, angel capitalists are wealthy individuals who do not have any structural ways of investing but rely on ad hoc decisions. According to the NVCA survey, this group of investors account for the biggest percentage of investment funds in the industry, sometimes even surpassing the institutional venture capital companies.
Institutional investment companies are divided into four categories; the first is the Small Business Investment Companies, which specialize in investing in small companies. They are legally registered under the Small Business Administration Act of 1958. The firms usually source their investment funds from the contributions of shareholders; however, their biggest source of investment capital is the US national treasury, which advances loans to them at very attractive rates. The second category of the ...Download file to see next pagesRead More
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