Back to top

How the venture capitals choose the companies to invest

How the venture capitals choose the companies to invest

Venture capitalists are the people or company who has lot of money and ready to invest in other companies. Venture capitalists look for a strong management team, a large potential market and a unique product or service with a strong competitive advantage. They also look for opportunities in industries that they are familiar with, and the chance to own a large percentage of the company so that they can influence its direction. Venture capital, by its nature invests in new businesses with high potential for growth but also an amount of risk substantial enough to scare off banks. So it’s not too surprising that Fairchild Semiconductor one of the first and most successful semiconductor companies, was the first venture-capital backed startup, setting a pattern for venture capital’s close relationship with emerging technologies in the Bay Area of San Francisco. Private equity firms in that region and time also set the standards of practiced used today, setting up limited partnerships to hold investments where professionals would act as general partners and those supplying the capital would serve as passive partners with more limited control. Numbers of independent venture capital firms increased throughout the 1960s and 1970s.

Even if you look in to companies like Face book they also have been started with the funding by venture capitalists like Vision Venture partners. With the boom took place in the software industry lot of startups began to come up with the financial investment done by the venture capitalists. It is the risk they are taking with their money. Some time it may fail also. Not all the startup that has been funded by the venture companies like vision venture partners reeked in the profits. But since they have the money they are afford to take up the loss when their decision fails. But they will be cautious from that moment onwards and ensure that they invest wisely going forward. Also they don’t invest in all the great ideas. They look out for a good team which works hard and smart.

They need good management team to take it forward. One such investment that took place recently is the investment by Sclavocs in Echo Fox. Scalvos previously held minor shares in the San Jose sharks team before moving to Los angles. He has a checked career before turning in to investment. He chooses to invest in Echo fox primarily since the video gaming industry always evolving and there is more space for new players as the fan base keep increasing every year.

 

Share This: