Venture capital（二十八）.pdfVIP

Directors’ Briefing Finance Venture capital For businesses requiring additional finance, 1.3 You have a balanced, experienced and which are unable to increase their level of professional management team borrowing, bank finance — in the form of secured loans and overdrafts — is not an • Your management team needs to have a option. If you cannot provide further capital successful track record. from your own resources, venture capital • You need to show commitment. (also known as private equity finance) may In practice, venture capital firms usually be the answer. measure this in terms of personal investment. They are likely to want a significant part Venture capital (VC) firms provide financing of management’s personal earnings to be in return for a proportion of your shares. strongly linked to business performance. They take a higher risk than banks do in the expectation of receiving higher returns. For • All key personnel must be contractually tied your part, you have to decide whether the in on mutually agreed terms. involvement of a venture capital firm is worth a For example, an advertising agency will find smaller slice of a larger pie. it difficult to secure venture capital if key creative people could leave. This briefing outlines: 1.4 Existing businesses should have a • Whether venture capital will suit you. successful track record The venture