VENTURE PLAN SERIES

Long-term returns from venture capital investments depend largely on the success of the firmвЂ™s portfolio companies, which generate returns either by being acquired or through an IPO. Unlike publicly traded securities, VC investments donвЂ™t offer the option of a short-term payout. Venture capital investments are usually long-term investments and are fairly illiquid compared to market-traded instruments (like stocks or bonds). It includes capital needed for initial expansion (second-stage capital), capital needed for major expansions, product improvement, major marketing campaigns, mergers & acquisitions (third-stage capital), and capital needed to go public (mezzanine or bridge capital).

Later-stage capital is the venture capital provided after the business generates revenues but before an Initial Public Offering (IPO).

VENTURE PLAN SERIES

This kind of financing will usually come in the form of a Series A or Series B round. Early-stage capital supports product development, marketing, commercial manufacturing, and sales. Early-stage CapitalД®arly-stage capital is venture capital provided to set up initial operation and basic production. Seed stage capital usually funds the research and development (R&D) of new products and services and research into prospective markets. Seed-stage capital is the capital provided to help an entrepreneur (or prospective entrepreneur) develop their idea into an early-stage product. Many entrepreneurs interested in raising venture capital funding will enter business incubators (accelerators), which provide various services and resources for entrepreneurs to connect them with venture firms and networks that will help them develop their business idea and product. Pre-Seed-stage is capital provided to an entrepreneur to help them develop an idea. The other 80% of any profits are divided equally (pro-rata) among the limited partners who invested in the fund. They may also receive an annual management fee of up to 2% of the total capital invested. The general partners, who are also the private equity fund managers, usually get 20% of the profits as a performance incentive (often called a вЂњcarryвЂќ). Profits from the disposition of investments made in the various portfolio companies are split between the general partners and limited partners. They may even serve as managers, advisors, or board representatives to the companies they invest in. Limited partners are passive investors.ДЄll the partners have an ownership stake in the venture firm, but the general partners are actually hands-on. Limited partners may include insurance companies, pension funds, university endowment funds, and wealthy individuals, among others. Structure of a Venture Capital Firm (Fund)ДЄ venture capital fund is usually structured in the form of a partnership, where the venture capital firm (and its principals) serve as the general partners and the investors as the limited partners. For instance, a venture capital fund specializing in the healthcare sector may invest in a portfolio of ten companies focused on disruptive healthcare technologies and equipment. Venture capital funds are run similarly to private equity funds, where the portfolio of companies they invest in generally falls within a specific sector specialization. Institutional and individual investors usually invest in private equity through limited partnership agreements, which allow investors to invest in a variety of venture capital projects while preserving limited liability (of the initial investment). Private equity investments are equity investments that are not traded on public exchanges (such as the New York Stock Exchange ). Investors in a venture capital firm generate returns when a portfolio company is either acquired by another company or taken public through an Initial Public Offering (IPO).There are different stages of venture capital financing for companies depending on their phase of growth and objectives.Venture capital firms make private equity investments in disruptive companies with high potential returns over a long time horizon.

Venture plan