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As the name suggests, Venture Capital is the financial aspect pertaining to a business. Venture Capital is not of a recent origin, infact it has remained popular since past many decades. Venture Capital can be said to be a kind of private fund, which is provided to a business. This could be either for a new venture or expansion of an ongoing project. Generally the venture capitalist brings in the required funds for the business and sometimes the much required expertise as well. The venture capitalists hold certain important rights in the business which could be related to management or in terms of profit percentage. In other words venture capital can be taken as a form of investment which the capitalist makes in return for some shares or profit margins in the business.

Apart from the option of Venture Capital there are few other options also, which the individual may resort to for acquiring funds for a business.

- Bank Loans: Commonly all the banks offer loans to individuals for various purposes, but the only drawback is that the person requiring loan has to prove his creditability before getting it sanctioned.



- Personal Savings: Personal savings is the first to go when starting a new business. The only problem with it is that they are limited, and generally the individual does not want to risk the safety of its family members due to the new venture.

- Boot Strapping: Boot Strapping means that the profits of the business are kept on rotation. Whatever expansion has to be made is done from the profits generated out of the current business. It is generally suited to relatively simple business which does not require huge investments neither to start-up nor for expansion.

Thus considering the drawback of the other type of funding options, Venture Capital steps in as a relief for all those entrepreneurs who have bright and innovative ideas, but fail to accumulate funds for the same.

Venture Capital- Best Suited For?

Venture Capital till now suited the best for entrepreneurship including the Dot Coms, which require huge capital for its startup. The Dot Coms require initial capital for its advertisements, equipments and employees. The advertisement becomes essential as the site requires lots of visitors and employees and the equipments are required to build up the site and attract more viewers. Apart from the dot coms it suits to people who lack financial stability and experience. The Venture Capitalist or firm usually makes its presence felt in the working of the organization. They have lot of experience to guide the new entrepreneurs in various areas of the business. It is most suited for new companies who have limited operations and cannot raise funds on their own from the public. Venture Capital, as already discussed above relates to private wealth of an individual or a firm which is generally given to budding businesses. A potentially viable business may have a great future, but what it requires in the beginning is funds for initializing various things required in the business. Revenue is required to set-up of office space, for hiring quality manpower, inventory, advertisement etc. The banks and other institutions generally, sanction loans only after ensuring that the individual seeking loan has the capacity to payback in case of loss in the venture. On the other hand a venture capitalist funds the venture after considering its viability and goes ahead to take risk in the venture. The concept of Venture Capital is most suited to organizations which have comparatively smaller scale of operations



Advantages and Disadvantages of Venture Capital:

In addition to fulfilling the funding requirements of an entrepreneurship or an organization, there are some other advantages of venture capital as well. It usually shares the years of experience and goes ahead to mentor the new venture into the right direction.

- Guidance: The firm seeking funds might be new into business but the firm or individual providing Venture Capital usually has good experience to be able to guide the new venture. Thus a proper guidance mends all the loose ends of the new business.

- Calculation of Risk: Since the capital utilized is of the venture capitalist, so it keeps a check on the growth and operations of the firm so that the risks are kept under control and the business does not suffer from severe loses.

- Network: The Venture Capitalist has several other contacts from its social network which can be utilized for benefiting the organization.



Disadvantages of Venture Capital:

- Time Period: Generally, the venture capital is invested in a firm for a specified period of time. This is normally calculated by the time the new venture would be taking to startup and settle. This means that the capitalist would like to pull out the money invested after the ensured time which might cause problems to the business

- Interference in Business: The Venture Capitalists generally try to interfere with the company matters and decisions and want to influence them in the direction which suits them.

- Control and Power: Venture Capitalists have a good amount of share in the company, which makes them seek for control over the affairs of the business. If they get a feel that the business is not moving in the correct direction, they might take full charge of the operations.

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Conclusion:

So this brings to end of the topic of Venture Capital. By and large it is suitable to those ventures which cannot prove its  viability to the public during its take-off stage, but  require huge capital investment to start is functioning.  Venture Capital brings in a sort of partnership which might continue for long or may end up after the initial investment period. Apart from fulfilling the monetary requirement it gives the add-on benefit of expert advice and good mentoring. Although this might not suit the needs of all but the availability of this option gives relief too many budding projects which would otherwise never take shape.