The Great American Dream is usually to find a company, have it be successful, get it public, and reap the huge financial rewards. Well, there are lots of Great American Dreams, but this is certainly a popular one. To pull it well, most companies can look to capital raising funding for your necessary funds to create a good plan into a great company.
To understand investment capital, you must learn it from the investor’s perspective. Imagine you’ve got a nice chunk of change sitting in your bank account. You want to place it to operate. Yes, you can shoot for the 7 to ten percent return from the stock exchange, however, you would prefer to go much larger. Where can you look? The answer can be either commodities trading or looking to get in on businesses that potentially have to go huge before, obviously, they’ve flourished.
Venture capitalists concentrate on this second ideal. They are seeking businesses that are small now, but contain the prospect of going public all night huge. We are talking about the Microsoft and Google-type of sizes. If your company doesn’t possess the prospect of being big, save time before contacting any venture capitalist funds! The investors are looking to hit home runs, not singles.
Just because the venture capitalist is swinging for the fences does not mean they do not take risks into mind. Of course they certainly. In this case, they do it by diversifying. The average capital raising fund will invest in 5 to 10 companies. There is no expectation that ones will make it. Instead, it’s expected that a majority will fail to function out. The money lost, however, is slight in comparison to the large rewards for your 1 to 3 businesses that go public and lose.
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