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iPUNIX Business Solutions located in Strathpine, Brisbane is a representative of Melbourne based Athenaeum Capital. Venture capital (also known as VC or Venture) is a type of private equity capital typically provided for early-stage, high-potential, growth companies in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company.
Venture capital investments are generally made as cash in exchange for shares in the invested company.
It is typical for venture capital investors to identify and back companies in high technology industries.
Venture capital typically comes from institutional investors and high net worth individuals and is pooled together by dedicated investment firms such as Athenaeum Capital.
Venture capital firms such as Athenaeum Capital typically comprise small teams with technology backgrounds (scientists, researchers) or those with business training or deep industry experience.
A core skill within VC is the ability to identify novel technologies that have the potential to generate high commercial returns at an early stage. By definition, VCs also take a role in managing entrepreneurial companies at an early stage, thus adding skills as well as capital (thereby differentiating VC from buy out private equity which typically invest in companies with proven revenue), and thereby potentially realizing much higher rates of returns.
Inherent in realizing abnormally high rates of returns is the risk of losing all of one's investment in a given startup company.
As a consequence, most venture capital investments are done in a pool format where several investors combine their investments into one large fund that invests in many different startup companies.
By investing in the pool format the investors are spreading out their risk to many different investments versus taking the chance of putting all of their monies in one start up firm.
A venture capitalist (also known as a VC) is a person or investment firm that makes venture investments, and these venture capitalists are expected to bring managerial and technical expertise as well as capital to their investments.
A venture capital fund refers to a pooled investment vehicle (often an LP or LLC) that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans.
Venture capital is also associated with job creation, the knowledge economy and used as a proxy measure of innovation within an economic sector or geography.
Venture capital is most attractive for new companies with limited operating history that are too small to raise capital in the public markets and have not reached the point where they are able to secure a bank loan or complete a debt offering.
In exchange for the high risk that venture capitalists assume by investing in smaller and less mature companies, venture capitalists usually get significant control over company decisions, in addition to a significant portion of the company's ownership (and consequently value).
Young companies wishing to raise venture capital require a combination of extremely rare yet sought after qualities, such as innovative technology, potential for rapid growth, a well-developed business model, and an impressive management team.
VCs typically reject 98% of opportunities presented to them[citation needed], reflecting the rarity of this combination.
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