The reason of venture capital funds is given by the inadequate offer of capital made by financial institutions and the high demand for funds for new firms or those that present a high risk but they have a great potential of development.
Therefore, venture capital (venture capital), provide financing for the first stage of bussiness or financing for the expansion of these companies.Initially, the venture capital funds are seeking to meet the needs of young companies for seed capital and for start-up financing.
Seed capital is directed to research and developing activities, for new products and technologies, before starting commercial production. The amount of funds is limited, the investment has a large time horizon,the risk of bankruptcy is very high and further financing for production is very high.
Venture capital is classified according to the time of investment, so that seed type financing occurs in the product research phase, before the product to be ready for market.
The source of venture capital,seed capital, are true business partners, that supports the risks of business and offer their experience and advice. The source requires no warranties and it does not attract personal liability.
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