In the past, the typical person-on-the-street depiction of a venture capitalist was that of a wealthy financier who wanted to fund start-up companies. The perception was that of an entrepreneur who developed a brand new "change-the-world" invention and who needed capital; thus, if they couldn't get capital from a bank or from their own pockets, they enlisted the help of a venture capitalist.
In reality, venture capital and private equity firms are pools of capital, typically organized as a limited partnership that invests in companies that represent the opportunity for a high rate of return within five to seven years. The venture capitalist may look at several hundred investment opportunities before investing in only a few selected companies with favorable investment opportunities. Far from being simply passive financiers, venture capitalists foster growth in companies through their involvement in the management, strategic marketing, and planning of their investee companies. They are coaches and mentors first and financiers second.
While venture capital investing shares many attributes with other types of investments, it has its own terminology that can often be confusing. This presentation will discuss some of the terminology used in venture and private equity investing that will enhance attendee’s knowledge of the industry.
Dali & Associates