A venture capitalist in short is a type of investor. To be more specific, a venture capitalist invests in start-up companies or ones that are in the very early stages of development. Venture capitalists will give these growing businesses a particular sum of money in exchange for equities, or a share of ownership within the business. The whole idea behind this investment is that the small company will hit a boom soon and see exponential growth in both sales as well as value. The return is then made on the venture capitalist investment as they reap the benefits as the company grows because of their shared equity. The companies that would usually attract a capital investor are characteristically more technical in nature. This can include a technological novelty that will predict to cause a lot of excitement and therefore generate a lot of sales upon release or other high tech fields.
A venture capitalist investment is a type of private investment. It is particularly for growing companies that don’t have enough impact or established reputation to be able to raise money from a public standpoint. Instead, they need private investors, such as VC’s to invest money in the company in exchange for equity within that company. In addition to a large amount of potential earnings, venture capitalists will usually get a lot of control in the workings and dealings within the company that they have invested in. This is due to the simple fact that investing in a young business that has not grown, although it may have promising potential, is a very dangerous and volatile investment that could have either very positive returns or very negative impacts all depending on the performance of the company. This is why you will see many successful entrepreneurs or other business owner’s venture into the realm of venture capitalism. They know the field of business very well and not only are interested in making a profit, but can also learn teach the company a few things about growth, product placement and other things to create a successful business.
Many venture capitalists like Jason Hope and Sheman Chu have a goal to bring their chosen growing business to the point where they can sell public stocks. At this point, many venture capitalists opt out and will move on to their next project. The idea here is that once shares of the company can first be publicly sold, the equity, or the value of the shares the venture capitalist has within the company will be at their highest. In this way, it is convenient for the venture capitalist to sell his or her share within the company, make a large profit and then choose to move on to the other projects and businesses that may turn another profit. They key to remember about a venture capitalist is that it is an involved investment that ends up becoming a sort of relationship where the investor wants to see the business grow. The bottom line is that venture capitalists not only invest in a company, but the future success of that particular company.