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Venture capital
From CopperWiki
Venture Capital is long term equity capital invested in new or rapidly expanding enterprises. The initial "seed" capital for these atart-ups is mostly raise from family members or wealthy individual investors, often referred to as "business angels."
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[edit] Why should I be aware of this?
War times, recession and economic slowdown give excellent oppurtunities to set up new businesses and gain competitive advantadge. This is because at such periods of ecomomic slowdown top talent is available at low wage cost and are also likely to migrate more easily. Capital infrastructure businesses will also find the expenses cheaper than they would in boom times.
As per the normal follows five stages of development, introduction, growth, maturity and decline phases of any product cycle, most ventures start with a loss and achieve break even after six months to an year. For capital ventures the curve can be timed in such a way that the growth period starts with the period when stock markets start picking up pace.
Despite the current economic downturn industries such as consumer Internet, telecom, outsourcing, food retail, healthcare, media and entertainment are among the few sectors which are very bullish. In spite of the downturn there’s no dearth of ideas in the areas of setting up food-less restaurants (get your own grub and eat at our table!), to dating cafes to developing 3G videos to opening a Knowledge Process Outsourcing (KPO) firm.
[edit] All about venture capital
The two areas VCs focus on most before starting a venture are market potential of the idea, and the team leading the idea. A marketing and an operations specialist are a must for the core team. It is advisable to form the core group with people with at least some experience in the industry.
Extremely good technology-based ideas are of little value unless the core team has complimentary skills of people who can monetize the idea in the marketplace.
[edit] Stages of financing
The traditional startup financing sequence starts with the entrepreneurs putting their own available funding into a shoestring operation. In the next stage, an angel investor, someone with spare funds and some personal or industry-related interest, may be convinced to contribute funding. Venture capitalists, on the other hand are said to invest "logical money" - that is willing to help give the new enterprise a more solid footing. First-round venture capital funding involves a significant cash outlay and managerial assistance.
Second-round venture capital involves a larger cash outlay and instructions to a stock or initial public offering (IPO) underwriter, who will sell stock in exchange for a percentage of what is sold. Finally, in the IPO stage, an investment bank is commissioned to sell shares to the public.
[edit] CopperBytes
- Venture capitalists had successfully introduced a number of dot-com startups of recent years.
- From Hyatt and FedEx to GE and Hewlett-Packard to Indian firms like Mindtree and Wipro BPO all were born in a slowdown. [1]
[edit] 90 degrees
According to Gartner’s list of top 10 disruptive technologies that will dominate till 2012, many have the potential to change the IT landscape as we know today. Companies formed around these ideas will attract significant capital and valuations. Gartner’s list of hot technologies include multi-core and hybrid processors, virtualization and fabric computing, social networks and social software, cloud platforms, web mashups, UI (User Interface), ubiquitous computing, contextual computing, augmented reality and semantics. Most of these technologies require significant R&D and this economic slowdown may be the ideal time to invest in researching them. [1]
[edit] References:
- What Is Venture Capital?
- Don't be afraid of starting a new venture in an economic slowdown
- Ideas for venture capitalist to beat the economic slowdown
- venture capital
