Angelical ventures

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Angelical ventures

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Abstract

Venture capital is an alternative lending mechanism available to business conglomerates across the world. It is a viable option when bank credit is difficult to obtain because of the risk involved in the nature of the business or novelty in the concept of the business as a whole.

The investors, known as venture capitalists or "business angels" fund a project during its commencement, development and transmission stage.

Ever since venture capitalists emerged as a source of finance in the United States in the late 1970s, many companies have benefited from them. The numerous start up firms in the Silicon Valley owe their existence and survival to them. These are generally companies with innovative concepts, which were not approved for funding by financial institutions.

Introduction
Types of venture capitalists
1. The formal venture capital
2. Business Angels
Business Angels
1. Their intervention
2. Environment
The investment process
1. Business plan
2. The management team
3. Failure of the project
4. Transfer to new investors
5. Transfer to the shareholders
6. Transfer to another company
7. Initial public offering
Conclusion

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[...] Will they have the skills or specific techniques? Will they have a sharp vision about market trends? Do they prefer healthy competition? These are some questions that need serious consideration. Complementing factor: The integration and the way in which various departments function together should be ascertained. Motivation: One needs to know the constraints and limitations of the other party. The ability to handle tough situations and mange conflicts should be analyzed. The "Feeling": The Business Angel will have to work with a team. [...]

[...] The terms of the output must be defined in the shareholders' agreement, including specifying a redemption fee over the shareholders - Failure of the project The business angel can subscribe for preference shares rather than common shares. In case of liquidation of the company, these actions may provide a refund priority. It is also possible to choose indirect means of accessing capital. This is possible in the case of bonds convertible into shares (OCA) or bonds redeemable in shares (NRS). [...]

[...] projects is extremely rigorous. The venture capital firm does not take unnecessary risks and considers carefully the development strategy of the company, and the financial risks that entails. Business Angels (informal venture capital) A Business Angel is an individual wishing to invest a portion of his assets in a company to not only provide funding, but also let the company make use of his experience and network of relationships. It is done either at the implementation of the project (seed capital), or startup phase of the company. [...]

[...] If the business angel acts as passive filler, he will be liable to pay all debts of the company which might have arisen out of his mismanagement. So, the business angel must be very vigilant. All transactions executed between the company and the angel must be recorded in the minutes. Environment The Business Angels are independent of the organization. But they can also join a few projects where they will bring their expertise to the fore like finance, business law, engineering etc. [...]

[...] Also if the company's concept is novel, there will be restrictions on financing. It is at this stage that a venture capitalist comes to the rescue. A venture capitalist has no or very few guarantees on the amount he has invested and will not return the capital or interest. In case the company doesn't perform well, he doesn't recover anything that he invested as well. In return, he takes a significant share on the company's profits. This enhances the borrowing capacity of the company. [...]

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