Venture business. What is it?

The term "venture business" appeared as a result of the translation of the English word "venture", which means a venture or enterprise. This type of business is focused on the use of new technologies or the results of scientific achievements in practice.

Venture business as a form of investment in Russia began its development relatively recently, but its main players and directions of development are already clearly defined. In general, he is engaged in the transformation of scientific and technological achievements, from the initial idea to the introduction of this technology into mass production.

Features of venture business

A venture is closely interlinked with innovation, but its activities do not necessarily include innovative technologies. For example, this could be the introduction of a venture project into new markets. But thus ideas and new inventions and will remain unrealized without venture financing as all activity connected with innovations, is very risky. Only the venture business organization gives investors the opportunity to make a profit that is much higher than the initial investment.

Differences from traditional activities

Venture business is primarily characterized by the fact that its funding is provided without guaranteed collateral. The necessary funds are provided only for a promising idea. In this case, the pre-agreed share of shares of the venture company serves as a pledge .

If the business of the established company goes successfully, then at a certain stage the investor will be able to sell its shares and not only return the invested funds, but also get quite acceptable profit. If the project is a failure, then the investor will be able to claim only a certain part of the firm's assets, depending on its share in the authorized capital.

But do not think that investors do not take into account business risk by financing venture projects. On the contrary, they plan to get a considerable profit from their investments, many times exceeding the interest rates of bank deposits.

Of course, venture business involves a certain risk, but a reasonable investor will never invest in a knowingly losing venture.

Financing

An investor, financing a venture project, does not expect a quick profit, the contract is concluded on a long-term basis. He plans his exit from the project in advance. Therefore, the enterprise should be prepared for this development of events, so that the withdrawal of funds does not affect its operational and financial activities.

The investor puts forward special requirements to the team involved in the project. Very often money is allocated not so much to the idea or project, but more to specific people.

Advantages of such a project:

1. Venture business helps to attract the necessary funds for the implementation of risky, but promising projects, when other sources of financing are not available.
2. Money for project implementation is allocated without collateral.
3. Financing is carried out in a short time.
4. This method of investment does not imply payment of interest, dividends, etc.

Disadvantages:

1. It is very difficult to find and interest investors.
2. The investor needs to allocate a stake in the authorized capital.
3. An investor can leave the project at any time by selling his shares to a third party.