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Venture Financing

Venture (in English translation - a risky enterprise) is an investment company whose activity is connected exclusively with innovative projects (start-ups). Investments of funds by venture funds are made in securities, enterprises with a sufficiently high risk share in order to obtain extremely high incomes in the near future.

As a rule, venture financing refers to the sphere of the latest scientific developments and technologies. According to statistics, about 70-80% of these investments do not bring returns, but 20-30% of successful projects cover all losses incurred and bring investors profit.

Venture financing is aimed at investing in venture capital firms, which are small businesses, undertaking experimental development and science intensive work, preparing the basis for venture projects.

Ventures are internal and external. The internal venture organizes the authors of the idea together with venture entrepreneurs. The external venture attracts funds for its projects through special funds and funds from other investors.

Venture financing is a risky enterprise aimed at using technological and technical innovations and scientific achievements that were not used before in practice. This type of financing is associated with a serious risk of non-receipt of income, as a result of which the invested funds may remain uncovered.

Venture financing is used for projects for which it is impossible to obtain funds in the form of a loan from a bank or other generally accepted sources of financing.

Today there is a concept of venture business. It implies a business focused on the use of new developments, which are only planned to be put into practice. Under venture capital, this is understood as long-term investments in securities and risky enterprises, which are invested in the expectation of quick superprofits.

Venture operations are aimed at lending and investing in the latest inventions and developments. For such operations, there is an increased degree of risk. Venture banks are created specifically for lending to risky projects. In cases of successful implementation of projects such banks receive a part of the income, a share of the profit from the successful implementation of the development or innovation.

The main task of a venture investor is investing money in the most promising business for obtaining a large profit by selling its stake in the company.

Venture capital can come from different sources: from large companies, the state, banks or specialized funds. Venture financing in Russia is most often performed by large companies, in whose presence there are available funds. By now, the share of venture investment by the state has grown in the country. Specialized funds have appeared in many regions of Russia. The activity of private funds is still very limited. Banks in general do not risk investing in risky projects.

When looking for a project for investing in a venture venture, the emphasis is not on the invention itself or innovation, but on the particular business of the inventor. Therefore, when choosing a project, a competent business plan is of great importance.

After selecting a project, the company in which venture financing is supposed to be injected is subject to inspections. Only after this, contracts are signed and the investment process is carried out. In the future, the investor gets the right to some control over the company and influence on the processes occurring in it.

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