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Venture Capital

Venture capital (VC) is often required for the financing of high-tech, high-risk projects. VC is provided by VC companies who manage funds from private, institutional, and public investors.

Generally, VC fund investors accept a higher risk of failure than is normally the case for other more conservative investments. This is because young companies rarely have significant assets or revenue history. In return for taking on this risk, VC companies expect to recoup their investment as a result of increased market potential resulting from a perceived unique selling proposition.

VC participation is limited to a specified period of time, at the end of which the VCs “cash out” by selling their shares and realizing profit at a margin of between twenty to thirty percent. These shares are usually sold as part of an “initial public offering” (IPO ) - the first sale of stock by a company to the public. Where an IPO is unrealistic or holds little promise, VC companies can realize their shares through a so-called “trade sale”: the selling of shares to another company.

Companies can approach VCs directly to apply for VC money. In Germany, the appropriate financial partner can be found through the German Private Equity and Venture Capital Association (Bundesverband Deutscher Kapitalbeteiligungsgesellschaften e.V., BVK). Special conferences and events like the German Equity Forum (Deutsches Eigenkapitalforum) provide an opportunity for young enterprises to come into direct contact with VC companies.

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Venture Capital

Venture Capital

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