This is a discussion on Take the venture capital route within the Local & Foreign Issues forum, part of the Community Lounge category; IF YOU have very deep pockets with cash to spare, you may want to consider growing it by helping other ...
IF YOU have very deep pockets with cash to spare, you may want to consider growing it by helping other firms to grow.
One way of doing this is by participating in a venture capital fund, which typically makes money by owning equity in the firms it invests in.
It differs from buying shares of a listed firm because a venture capital firm looks for partner businesses it can understand as well as to add value and expertise to. Another key difference is the time frame. When you invest in a venture capital fund, you are looking at a gestation period of five to eight years.
Usually, the venture capital fund will consider hundreds of investment opportunities before investing in the selected firms that fit its fund profile.
So, if its mandate is to invest in technology-related firms, it may consider those with a novel technology or business model in high-tech industries, including biotechnology, information technology (IT) and software.
The goal is to generate a return through an eventual realisation event such as an initial public offering (IPO) or trade sale of the company.
Venture capital funds are primarily invested by institutional investors and ultra high net worth individuals. Generally, the latter will allocate 5 per cent to 10 per cent of their wealth for such investments. This means they should at least have investible assets of $20 million to consider venture capital investing.
Take the venture capital route