Venture Capitalism : An Investment Business Essay

762 Words Nov 29th, 2015 4 Pages
Venture Capitalism “Venture capitalists are committed to funding America’s most innovative entrepreneurs and working alongside them to transform breakthrough ideas into emerging growth companies that drive U.S. job creation and economic growth.” (nvca.org). Venture capitalism is an investment business. It is a way or raising money for start up companies that are unable receive the money required from other avenues. Venture capitalists are groups of individual firms that help finance entrepreneurs. These firms help to finance and create a strong foundation for choosen start up companies. Not only do they create funds, they also hold shares and are involved in the company. The role of the typical venture capitalist is usually hands on. They provide funds for a company or a group of researchers to create products. These firms begin by first raising capital from various limited partners, such as: banks, insurance companies, pension funds. After they have raised this capital they use the money to find and finance start up companies, or entrepreneurs. Once the company starts they directly impact the business decisions that the company carries out, “As general partner, the venture capitalist plays an active role in managing the portfolio, but the fund’s limited partners are not permitted to play an active management role” (Berline). This means that the role of venture capitalists in the company directly affects most business decisions. This allows them to guide the new…

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