What is Venture Capital?

Important banking qna for banking aspirants, which is helpful in banking exam.

May 4, 2015 12:19 IST

Money provided investors to start up small businesses and firms aiming to receive long term growth are known as Venture capital. It is generally a important source of funding for firms that do not have access to capital markets. It entails high risk for investors but has the potential for above average returns.

Advantages of Venture capital:-

  1. Venture capital provides valuable information, resources, technical assistance, etc., to make a business successful.
  2. New projects are financed through venture capital which generally offers high profit­ability in long run.

Disadvantages of Venture capital:-

  1. Benefits offered by such financing can be realized in long run only.
  2. It is an uncertain form of financing.

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