8.1 - Venture Capital

This is a source of finance that is provided to the business that guarantees long-term share capital.

Venture capital is provided by private investors both to start up and to expanding businesses.

In exchange for the capital, the private investor receives a share of the business. In addition, the investor receives a return on the investment (ROI) that depends on profit from the growth of the business.

Venture capitalists tend to have a major influence in any business in which they invest. They can be very demanding in terms of the control they wish to exert.

The business owner needs to weigh this potential interference when bringing venture capitalists on board. It also needs to be considered, that the venture capitalist might bring expertise that the business doesn't possess.

Another factor which the owner should consider is the percentage of profit demanded by the venture capitalist. The greater the venture capitalist invested, the higher the expectations on return on investment. They can ultimately control the company.