Daffodil International University

Faculties and Departments => Business & Entrepreneurship => Topic started by: 710001508 on April 20, 2017, 06:07:45 PM

Title: venture capital
Post by: 710001508 on April 20, 2017, 06:07:45 PM
Venture Capital vs Loans

Although loans and venture capital are both common methods for funding businesses, venture capital is very different from a loan.

With a loan, a lender gives a company money, and the company has a contractual obligation to pay back that amount plus interest over some period of time. Sometimes the loan is backed by assets (like equipment or inventory) or receivables. In the case of many small businesses, the loan is backed by a personal guarantee from the business owner. This backing allows the lender to recoup some of its investment in case the lendee defaults (fails to make payments)

With venture capital, the startup company issues private shares in exchange for money.

The venture capitalist's partnership fund actually becomes a partial owner of the startup. Additionally, venture capital is usually only used with high growth industries, where risk is much higher. In these cases, there are little or no assets to back the loan in the event of default so the likelihood of obtaining a loan is much lower, and the potential payouts must be drastically higher to result in a successful investment.

Read more: http://www.businessdictionary.com/definition/venture-capital.html
Title: Re: venture capital
Post by: Md.Shahjalal Talukder on July 19, 2017, 09:25:36 PM
Title: Re: venture capital
Post by: Mohammad Salek Parvez on October 05, 2017, 11:32:48 AM