Venture Capital（十四）.pdfVIP

Venture Capital Overview of Venture Capital Three Phases of Venture Capital Investing SBICs and SSBICs State Government Initiatives Community Development Venture Capital Key Challenges and Best Practices Overview of Venture Capital New capital source developed after WWII to supply equity to high-growth early stage and technology-based businesses that needed large investments before becoming profitable Potential for large economic development impact due to its role in financing new technologies and industries, and growth firms Private partnerships invest funds from financial institutions. pensions, corporations, wealthy individuals, endowments Some financial institutions and corporations set-up their own funds. 1998: 500+ VC funds had $50 billion invested $13 billion. With Internet boom, VC exploded to 635 funds that raised and invested over $90 billion in 2000! By 2005, investments dropped to $21.7 billion-67% above 1998 Multiple public and civic efforts to expand and target VC Federal SBIC/SSBIC programs and new market tax credits. 45 state initiatives via publicly managed funds, investment in private funds, or tax incentives to private investors. Some regions and cities have created venture capital funds Recent emergence of community development venture capital Raising Investment Capital Need Long-term patient capital and far more capital than RLFs : VC funds typical have 10-12 year life Capital covers high management costs, lack of cash flow in early years, and follow-on investments. Pension funds are key investor: 40%+ of new annual capital Fueled 240% increase in size of median VC partnership during 1990s Investors use incentives that tie compensation to returns and covenants in partnership agreements to influence managers ED-oriented venture capital funds use multiple capital sources: