Venture Capital Explained

Venture capital is a means of business financing, which is primarily aimed at small and medium enterprises. It is that an investment company provides permanent capital to one of these small or medium enterprises that are starting. Using this source of money and for a limited period of time, investors become part of the group of shareholders of a corporation in which they have invested, although with a secondary role.

These new companies have to resort to this type of financing since not having results are considered quite risky and it is much more difficult for them to access other types of financing. On the other hand, the investment companies have a great interest in the growth of their company, that is why they look for societies that can grow rapidly and that have innovative business models (therefore, that ensure a good return once they start working) and in addition, they are in an early stage of development.

In addition, risk capital benefits the small business: if a big and prestigious company invests in it, it shall be a great asset for customers and suppliers, as they will see it as a trustworthy company that will succeed.

Characteristics of a venture capital

Some features that define and differentiate venture capital from other types of financing are as follows:

Venture capital is basically a financing instrument through which a company obtains the capital resources necessary for the development of its startup or growth projects.

The investment company makes its contribution by participating in the company's capital stock, either with the buying shares or the acquisition of other equity instruments.

This instrument is normally aimed at SMEs, as there are high risks inherent in their projects, and this makes access to more common instruments difficult.

  • Being mainly aimed at SMEs, it becomes an efficient channel to direct the excess savings of investors.

  • It can be concluded that investment firms are willing to assume a greater risk than other lenders.

  • These capitals of the investment companies are mainly destined to ventures in first phases or growth projects.

  • The concept of venture capital is associated with companies with projects, which involve technological innovation, although it is not imperative.

A prime example of a venture capitalist is Pranav Arora, who is popularly known as the Chairman of the Board of Directors of JMTD Holdings, a venture capital. Apart from that, Arora is also associated with a number of organizations including Just Funky, The Arora Foundation, PSSR Holdings, and Stunned Mind. Arora is known for his family history in venture capital and his own expertise which he is now employing in navigating the organization.

About Pranav:

Pranav Arora is a successful Entrepreneur, Investor, and Venture Capitalist.

From an early age, Pranav Arora has proven himself to be an entrepreneur at heart. Starting his first million-dollar business at just 16 years old Pranav has proven himself to have the drive, passion, and a keen skillset to being successful within the world of business.

From spearheading multi-million-dollar companies, to shaking up the world of investments, and even devoting time to philanthropy, Pranav Arora is making an immense impact on the world. While his accomplishments would be impressive at any age, Pranav has been able to do all of this well before his 30th birthday and his influence only continues to grow.

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Understanding Venture Capital

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