professionals are essentially managers of risk.
They assess hundreds of
business plans each year and invest in the most promising ventures, then
become actively involved as strategic managers. They invest a
combination of equity and expertise in several different ventures;
usually in cooperation with other firms; to diversify the risk
associated with venture investing. The returns realized by the venture
capital process have attracted funds from institutional investors, and
as a result the resources available to young growth companies have
Venture capital was
instrumental in the success of companies like Cypress Semiconductor,
Apple Computer, Intel, Amgen, GenenTech, Solectron, Cirrus Logic,
Federal Express, Au Bon Pain, Gymboree, Brookstone, The Sports Authority
Venture capital organizations
are generally privately held partnerships or corporations that invest alongside
management in young, rapidly growing or rapidly changing companies. They invest
large quantities of long-term risk capital, usually seeking capital appreciation
rather than cash repayment.
While venture capital
organizations have historically been concentrated in New York,
California and Massachusetts, today venture capital professionals and
their portfolio companies are located throughout the country.
Unlike other financial
intermediaries, venture capital professionals add value to their investments by
actively participating in the management of their portfolio companies. They
function in a dual capacity as financial partner and strategic adviser,
providing the entrepreneur risk capital to fund the venture's growth and expert
business counsel to ensure the enterprise's survival and competitive positioning
in the marketplace.
Venture capital professionals
come from all walks of life.
These individuals provide an
important source of expertise for the emerging companies they finance. They know
individuals in banks and brokerage firms, attorneys, accountants, and others
needed to help new companies succeed.
balance of talents in
the close relationship between entrepreneur and venture capital professional has
been a crucial element in the success of emerging ventures.