Venture capital finance is instrumental in inducing technological development, stimulating creativity and innovation and nurturing entrepreneurship. Concerted efforts are required by financial institutions, private sectors and other agencies to create a conducive environment for the growth of venture capital. In particular, initiatives are required to widen the perspective of venture capital finance and create a favorable fiscal and regulatory environment.
The venture capital schemes of the term-lending financial institutions presently focus mainly on supporting development of technology and implementing indigenously developed yet untested technologies. While this concern is understandable because of a genuine need for expanding the base of viable indigenous technology, it leads to a somewhat limited view of venture capital. What is required is a broader perspective on venture capital so that it is viewed as an instrument for financing a wide range of projects that essentially have a “high risk- high-return” profile.
In this context, it is important that entrepreneurs, financing bodies, fiscal authorities, regulatory bodies and others understand the concept and relevance of venture capital. It should be appreciated that venture capital is an instrument for strengthening entrepreneurial forces in the economy; a device for inducing risk taking and a mechanism for promoting a closer investor/investee relationship. Those who participate in venture capital arrangements must overcome certain traditional psychological barriers and be willing to build a relationship of genuine partnership and not a perfunctory association of limited involvement.
To nurture the growth of venture capital, a favorable fiscal and regulatory environment should be created. Some of the specific things that may be are investors subscribing to the capital of venture capital funds may be given greater tax reliefs, and the long-term capital gains of the venture capital funds may be taxed at a concessional rate or even exempted totally from taxation. Orderly and efficient mechanisms must be evolved to facilitate liquidation of investments of venture capital funds.
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Venture Capital
10 August 2010 8:30 PM |
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Venture capital represents financial investment in a highly risky proposition in the hope of earning a high rate of return. While the concept of venture capital is perhaps as old as the human race, the practice of venture capitalism has remained somewhat fragmented and individualized...
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Small Business Venture Capital
10 August 2010 8:30 PM |
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Venture Capital Firms
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While the terms and conditions of venture capital are not standardized, there are some salient features of venture capital arrangements. The venture capital firm is inclined to assume a high degree of risk in the expectation of earning a high rate of return. The venture...
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Venture Capital Funds
10 August 2010 8:30 PM |
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The principal sources of venture capital funds for a business firm are equity capital, preference capital, debenture capital and term loans. Equity capital represents ownership capital because equity shareholders collectively own the company. They enjoy the rewards, as well as bear the risks of ownership....
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Venture Capital Investing
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When investing in venture capital, always keep one thing in perspective. All investments have equal risk, and the average cost of capital for the firm can be used for evaluating investment proposals. Investment proposals differ in risk. An investment proposal to manufacture a new product,...
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Venture Capital Investors
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While evaluating the profitability of venture capital investment proposals under the capital budgeting techniques such as Net Present Value (NPV) and Internal Rate of return are used. It should be noted here that these sophisticated methods use the “cost of capital” as the criterion to...
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People spend a great deal of time on the job, and it is important, especially in venture capital to design jobs so that individuals feel good about their work. This requires an appropriate job structure in terms of content, function and relationships. The focus of...
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Business Finance
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Financial planning is the application of planning to various aspects of finance function. Basically, business finance involves the formulation of a financial plan that states the quantum of finance required, the pattern of financing and the policies to pursue for the administration of the financial...
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Business Financing
10 August 2010 8:30 PM |
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When talking about business financing, it is extremely important to understand the term financial planning. It can be defined as the application of planning to the various aspects of the finance function. Basically, business financing involves the formulation of a financial plan which states the...
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Angel Investors
10 August 2010 8:30 PM |
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An angel investor is one who does not desire much say in the management of the company in which he invests, and also favors a slower return on investment. However, it should be borne in mind that they still make investments in the hopes of...