Learn what Venture Capital is and how venture capital works – WAU
Venture Capital – also known as venture capital – is investment in companies with high growth potential, but also with a high level of risk.
As popular wisdom says, you reap what you sow. Thus, the business world is based on investing in things that must be built, in ideas that are in the mind of a visionary. What if everything is just a delusion? What if, instead of dreaming, we dedicated ourselves to working for the things that are already guaranteed?
That’s what makes the marketing world so special. On the one hand, all the seriousness of the adult world with schedules and complaints, and on the other, the teenage dream of being our own boss and becoming millionaires with a great invention.
That is why in today’s article we talk about the famous venture capital or corporate capital. Also known as Venture Capital, it is used to finance start-ups that, at the same time, have great market potential, even if they have a high level of risk.
Let’s learn more about this idea, that in this world Peter Pan is a millionaire and lives in Silicon Valley!
In this article you will see:
What is Venture Capital?
It is a financial action in which one or more investors create a fund for research, select and capitalize on an emerging project. This project, despite presenting a considerable risk, has a high growth potential.
These venture capital groups generally have two types of modalities:
- General Partner (General Partner): each participant can, with some autonomy, choose the projects and invest part of the capital;
- Limited Partner (Limited Partner): some partners manage and others simply put money in and receive the profits (when any).
How does Venture Capital work?
The group, in the first place, is created by means of a contract and an operational statute in which the investment percentages of each participant and their skills are determined. Also established are: area of operation, the focus of investments and the vision of the enterprise.
Then the type of profile or the stage the company is in is defined, and the possibilities are:
- Seed Capital: for companies that are only on paper and need to be incorporated;
- Incubators: for companies that can be incorporated, but not yet firm in the market;
- Accelerators: for businesses that are up and running but need to accelerate growth and improve performance.
Once the fund to be used for the investment has been determined, the project selection process begins. The idea is diversify risk, that is, dividing the fund and investing in several startups, in order to increase the chances of economic return.
The study to choose which startup to invest in is complex. The following must be carefully considered:
- the applicant: as there are many, it is important that the team is carefully selected;
- the market the project is aimed at;
- the business concept.
Every year, thousands of projects are analyzed and only a few are supported. These groups invest in the advance purchase of shares and may or may not participate in the executive management of the chosen companies. Often, the investment is made in cash, but also in training, knowledge, consultancy and client portfolio.
If the business goes well, the Venture Capital return the initial money to their investors, adding the profits. When this happens, it is because the startup was acquired by a large company or entered the stock market.
What are the main platforms for Venture Capital?
Below, we present two of the main platforms for Venture Capital so that you can find the most suitable for your idea.
Angels of London
Anjos de Brasil is a non-profit organization founded in 2011. His own experience was that of a startup. Therefore, after completing the complete cycle of growth and consolidation in the market, it started supporting other startups in the growth phase.
Its institutional mission is:
“To foster London entrepreneurship, through the dissemination of knowledge, connecting supporters (angel investors) to new entrepreneurs and promoting public policies to encourage and stimulate the economic and social development of London.”
The philosophy of this platform is based on the perception that the chance of success for a good idea depends directly on its funding. Among its activities, we can mention:
- preparation of online and offline content;
- connecting new entrepreneurs with supporters (angel investors), both through an online platform and in face-to-face events (meetings);
- creation of a network of angel investors;
- advice and consultancy for entrepreneurs to present their projects
- promoting and encouraging the creation of public policies that encourage entrepreneurship with the support of angel investment.
Kaszek is a venture capital company that has its main focus in Latin America. It defines itself as a business that:
“Associates exceptional entrepreneurs to create technology-based companies that are long lasting and high impact. ”
In addition to investing with capital, they also offer knowledge and experience in:
- corporate execution;
- team building;
- contact networks.
Kaszek is already well known in London for being one of the main investors of Pitzi and Nubank, recently classified as a unicorn startup, which means having a market price assessment of USD 1 billion dollars.
We offer just two examples, but there are many groups of investors willing to evaluate your idea and help you grow. So don’t hesitate and organize your project right now to start articulating your growth through Venture Capital.
If you want to go deeper into the topic and become a expert in startups, continue to visit our blog and ask all your questions about what a startup is.