Venture Capital

Venture Capitalists are wealthy private investors who can help finance your business either it being a business in trouble financially or a new business venture.

There is usually a five year lock up on Venture Capital investments, this means the Venture Capitalist or the business they are helping to fund cannot get out of the deal until the five years is up, sometimes this may be longer depending on the agreed business plan. They also charge management fees and incentive fees as well as taking a good sized share of your business. Unlike Business Angels, Venture Capitalists like to have a director or management role within the company to discuss the running of the business as well as keeping a close eye on their investment making sure the business succeeds. But there are a few Venture Capitalists who like to give the company the finance they require then take a back seat and let the company who know the trade etc. and let them run the business on a day to day basis.

Finding the right investor for you may be a scary prospect but there many Venture Capitalist firms now available which have investors waiting to invest in a new and upcoming business with good prospects. Making a proposition to an investor can be a scary thought, you need to remember they will want to know exactly what your plans are for coming years, the market you will be promoting your product, service in as well who your target audience are for this as well as how much it will cost to make if necessary and the cost you will sell it for, showing the profit you will make on each product, item or service. One thing to remember is that investors don’t care about the dreams you have about this venture, all they want is a good return on their investment in your business.

Before going to see a possible Investor the best thing to do is to get advice from other business people in the same area you want to go into to get their advice on your product and or service and their honest opinion of the idea.

You will need a well detailed business plan when you meet up with the Venture Capitalist and if you are turned away by them don’t give up keep trying, if show people you’re serious about your venture and wont fall at the first hurdle your more likely to win people over with their own weaknesses.

Some points to consider are:

o Put all your thoughts on your new venture on paper, brainstorm everything

o Research your proposed market or industry

o Get someone to argue against you to see if you have a water tight solution

o If you have little knowledge on a certain area ask for help from people who know

o Create a budget, showing every detail you can think of

o Read thoroughly your business plan to ensure there’s no errors

o Know who your competitors are

o Present yourself well – the more presentable you are the more likely you are to be respected by the Venture Capitalist make a good impression

o Make sure you know your speech, your business plan back to front so you come across confident as you only have one chance

Widget sales are booming – the competition is scrambling, demand is up, and the books are finally treading water. Your core management team has big ideas for the future of Widget Inc. Opportunity is abundant; but how will you fund that next big leap?

As your start-up matures, obtaining second- or even third-round funding may allow your business to expand and grow into new opportunities identified after your business was established. If your product or service has proven itself in the marketplace, you may be a candidate for an additional round of funding.

Some possible uses of post start-up funding include:

* Penetration of new markets, either by industry or geographic location

* Development of new products or services that compliment your key lines of business

* Acquisition of competitors, staff and/or facility expansion, or new equipment

Damage Control

If your company is struggling to make ends meet, post start-up financing is not an effective way to address red ink.

Consider other methods of debt management such as refinancing, streamlining systems of production, and bootstrapping before looking for additional funding. Investors will not be interested in extending additional funds to companies that have not yet established themselves firmly in the marketplace.

Identifying Post Start-Up Funding Sources

The best source for post start-up funding may be your original investment partner. However, sometimes asking your investor-partner for additional funds can be a lot like asking your parents for a raise in your allowance. You’re going to have to really prove a need for it, and even then, your original funding source may have woke up on the wrong side of the financial plan.

Should this prove to be the case, there are additional sources to consider, including:

* Lending institutions (banks)

* Venture capital firms

* New private investors

* Other professional service providers within your core management team

If you developed a list of potential investment partners prior to start-up, renew your contact with these individuals. By telephone or letter, convey the success your product or service has experienced, as well as your purpose for the post start-up funding. With a solid track record in hand, you may be surprised to find how many potential second-round investment partners you have.

In addition, you’ll be in a stronger position during the negotiation process, meaning you won’t have to give up as much control to achieve your desired result.

Tips For Maximizing Post Start-Up Funding

* Don’t commingle funds. Avoid falling into the trap of using new funds to level the books. If you obtained additional funding for expansion, do not deviate from the plan. Address any cash flow problems or existing debt service independently from your company’s expansion needs.

* Learn from past mistakes. Undoubtedly, your company’s start-up phase was a learning experience unlike any other. Recall the lessons learned from handling your initial start-up capital. Now that you’ve established a strong working relationship, call in your management team to gather additional opinions on the best way to disburse funds on each project.

* Look for new opportunities along the way. As you implement your expansion plan, be on the lookout for ways to streamline and maximize the results of your efforts. Don’t be afraid to upgrade your plan; remember that your business plan should be a “living” document, able to flex as the status of your market and the general economy change.

In the present days when everybody is for seeking an extra coin to add to their account and even to better their lives, people always take the option of putting up new business ventures. So as to succeed, there are some vital aspects of business you need to consider and ask yourself. Here are some of them.

Why am I starting this project in the first place? This question has a straight answer which is to make profits. But I would like to ask entrepreneurs instead of concentrating on making profits they should strive to offer quality products and services in whatever location they choose to operate and in return they will make money.

How long have you prepared to start up the project? I say this because some people take a short time to prepare before they start up a venture. A good and viable venture requires one to spend time gathering information by conducting market research, raising capital and coming up with proper business strategies on how to run the company.

What is the source of your capital? Many people get huge loans to start up a company. Getting a loan is not necessarily the best option of financing a new business especially when you are not sure of its profitability. You may have a very great business idea but it will be put to test once everything is in place and running.

I propose that the best way to get capital is from your personal savings or joining up with like minded people and financing the project. The people you choose to partner with should be determined to see the project through by offering business ideas and providing support in terms of management and financing.

Not all businesses and organizations have the ability to attract venture capital. Basically, venture capital is given by a group of professional investors, which are generally looking for business opportunities that have a high rate of growth that they could invest in. They usually provide the funds that would help you expand your business and in return, they want to have shares in your business.

If you have come up with a brilliant idea, which has a massive growth potential, and you are struggling to be able to raise some money using the regular channels then this direction may work for you. Be ready to start giving away a big chunk of your business and keep in mind that majority of venture capitalists would be wanting to have a say in how to run your business.

This method to raise funds would be a great way as well to be able to get several fresh minds to review your business concept. A venture capital investment company usually invests in fantastic business ideas and is equipped with the knowledge on turning great concepts into reality.

If all you are looking for would be some money to clear the debts that you already have, then do not go to a venture capital company. They would definitely not be interested. They would also not be interested in giving you funds to help you in buying a house or car. This is because they are mainly in the business to make money themselves through the growth of your future company.

Many firms dream of the day that a venture capital financing occurs. This is the day when they are handed a check for millions of dollars and told to go fulfill their entrepreneurial dreams. Unfortunately, for most this remains a dream. But this doesn’t necessarily have to be the case. Securing a venture capital financing can be a reality under the right conditions.

Perhaps the most important condition is that the firm develops a winning business plan. The business plan is the initial piece of information that venture capitalists review, and if it doesn’t compel them to take action, the journey towards venture capital financing ends abruptly.

Assuming that the business plan is flawless, what else is required of the management team seeking venture financing? The answer varies from firm to firm, but most venture capital firms want to see proprietary intellectual property, a large market size, management team members with expertise and experience, and a current valuation that allows for a good return on investment.

A final challenge in securing a venture capital financing is identifying the right venture capital firm. Venture capital firms typically have preferences that revolve around their location, sector preferences, stage preferences, partner backgrounds, other portfolio companies, and total assets held by the firm. Ventures seeking capital should make sure to find venture capitalists whose preferences match what they have to offer.

Raising venture capital is challenging, but fortunately, the results can far outweigh the hardship of overcoming the challenge. For firms that properly plan for and methodically approach venture capital financing, results are often within their reach.

What is Venture Capital?

Funding a company through venture capital refers to investment made by outside people for the businesses that are either struggling or new and growing. Funding a company through venture capital involves potentially a high degree of risk. However, the potential returns are also far better than the average returns on other types of investments. The people who dare to make such investments are known as venture capitalists. A pool of investments that shows more interest in investing the money of third-party investors in the businesses that are considered more risky according to the market parameters is known as a venture capital fund.

The entrepreneurs who are in need of venture capital for their struggling or new businesses always look for this kind of facility. The person who is ideal for these start-up enterprises is a mentoring capitalist. A mentor capitalist is capable of not only arranging the funds for these businesses but also guiding them to solve their problems.

Tremendous Growth In The Last 25 Years

In the last two and a half decades, there has been an extraordinary growth in the field of funding a company through venture capital. Until 1980; the total value of the assets managed by the venture capitalists was approximately $3 billion. Ten years later, that figure was raised by venture capitalists in only one year. By the year 2000, the venture capitalists started raising that money every quarter. There was a slowdown when the dot-com bubble burst, yet the level of funding a company through venture capital is still much higher than in the past. However, even after this much growth, there is a shortage of venture capital funds because the people seeking these funds are increasing at a faster rate.

How To Categorize?

Funding a company through venture capital can be categorized according to the type of the industry on which the venture capitalists are focusing. Most of the firms are interested in investing in a particular kind of industry. Only a few firms can invest in any type of business. Some firms invest only in the companies that are located in a particular geographical area; others invest only in companies that use a particular technology.

The life cycle of the company that is receiving the funds is also a criterion on the basis of which venture capital funding can be categorized. The number of venture capitalists interested in funding a new startup is very small. Most of the venture capitalists prefer to invest in companies that have survived initial growth problems.

Do Proper Homework For Getting Venture Capital

If you are interested in seeking support from the venture capital funding, then do your homework carefully. Gather information about the different venture capitalists and ask only those people who are interested in funding such types of proposal. There is no point in mailing blindly to just anyone.

Venture capital firms are comprised of individual partners. These partners make investment decisions and typically take a seat on each portfolio company’s Board. Partners tend to invest in what they know, so finding a partner that has past work experience in your industry is very helpful. This relevant experience allows them to more fully understand your venture’s value proposition and gives them confidence that they can add value, thus encouraging them to invest.

Fortunately, most venture capital firm websites list their partners with great pride. Each partner typically has a bio that includes their educational credentials, business accomplishments and investments that they have made. In identifying the right venture capital partner to contact for your company, try to find the partner that, from their background, will truly grasp the opportunity and can really add value.

Once you have identified the most appropriate venture capital partner, it is important to figure out how to contact them. As partners are often inundated with business plans, having a personal connection and/or introduction is often the difference between getting heard and not getting heard. For instance, if you attended the same university or worked at a company that they did, call or email them and use this as the introduction. If not, it is important to network. Call people that may have been associated with the partner and ask for an introduction.

Getting the partner’s attention is the first key hurdle in raising venture capital. The second hurdle is getting them to believe in the opportunity, and finally, giving them the enthusiasm and information needed to convince other partners in their firm that investing in your venture represents a sound investment.

Venture capital is money provided by professionals who invest alongside management in young, rapidly growing companies that have the potential to develop into significant economic contributors. Venture capital is an important source of equity for start-up companies.

Professionally managed venture capital firms generally are private partnerships or closely-held corporations funded by private and public pension funds, endowment funds, foundations, corporations, wealthy individuals, foreign investors, and the venture capitalists themselves.

Venture capitalists generally:

- Finance new and rapidly growing companies;

- Purchase equity securities;

- Assist in the development of new products or services;

- Add value to the company through active participation;

- Take higher risks with the expectation of higher rewards;

- Have a long-term orientation

When considering an investment, venture capitalists carefully screen the technical and business merits of the proposed company. Venture capitalists only invest in a small percentage of the businesses they review and have a long-term perspective. Going forward, they actively work with the company’s management by contributing their experience and business savvy gained from helping other companies with similar growth challenges.

Venture capitalists mitigate the risk of venture investing by developing a portfolio of young companies in a single venture fund. Many times they will co-invest with other professional venture capital firms. In addition, many venture partnership will manage multiple funds simultaneously. For decades, venture capitalists have nurtured the growth of America’s high technology and entrepreneurial communities resulting in significant job creation, economic growth and international competitiveness. Companies such as Digital Equipment Corporation, Apple, Federal Express, Compaq, Sun Microsystems, Intel, Microsoft and Genentech are famous examples of companies that received venture capital early in their development.

Private Equity Investing

Venture capital investing has grown from a small investment pool in the 1960s and early 1970s to a mainstream asset class that is a viable and significant part of the institutional and corporate investment portfolio. Recently, some investors have been referring to venture investing and buyout investing as “private equity investing.” This term can be confusing because some in the investment industry use the term “private equity” to refer only to buyout fund investing.

In any case, an institutional investor will allocate 2% to 3% of their institutional portfolio for investment in alternative assets such as private equity or venture capital as part of their overall asset allocation. Currently, over 50% of investments in venture capital/private equity comes from institutional public and private pension funds, with the balance coming from endowments, foundations, insurance companies, banks, individuals and other entities who seek to diversify their portfolio with this investment class.

What is a Venture Capitalist?

The typical person-on-the-street depiction of a venture capitalist is that of a wealthy financier who wants to fund start-up companies. The perception is that a person who develops a brand new change-the-world invention needs capital; thus, if they can’t get capital from a bank or from their own pockets, they enlist the help of a venture capitalist.

In truth, 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 entrepreneurs first and financiers second.

Even individuals may be venture capitalists. In the early days of venture capital investment, in the 1950s and 1960s, individual investors were the archetypal venture investor. While this type of individual investment did not totally disappear, the modern venture firm emerged as the dominant venture investment vehicle. However, in the last few years, individuals have again become a potent and increasingly larger part of the early stage start-up venture life cycle. These “angel investors” will mentor a company and provide needed capital and expertise to help develop companies. Angel investors may either be wealthy people with management expertise or retired business men and women who seek the opportunity for first-hand business development.

Investment Focus

Venture capitalists may be generalist or specialist investors depending on their investment strategy. Venture capitalists can be generalists, investing in various industry sectors, or various geographic locations, or various stages of a company’s life. Alternatively, they may be specialists in one or two industry sectors, or may seek to invest in only a localized geographic area.

Not all venture capitalists invest in “start-ups.” While venture firms will invest in companies that are in their initial start-up modes, venture capitalists will also invest in companies at various stages of the business life cycle. A venture capitalist may invest before there is a real product or company organized (so called “seed investing”), or may provide capital to start up a company in its first or second stages of development known as “early stage investing.” Also, the venture capitalist may provide needed financing to help a company grow beyond a critical mass to become more successful (”expansion stage financing”).

The venture capitalist may invest in a company throughout the company’s life cycle and therefore some funds focus on later stage investing by providing financing to help the company grow to a critical mass to attract public financing through a stock offering. Alternatively, the venture capitalist may help the company attract a merger or acquisition with another company by providing liquidity and exit for the company’s founders.

At the other end of the spectrum, some venture funds specialize in the acquisition, turnaround or recapitalization of public and private companies that represent favorable investment opportunities.

There are venture funds that will be broadly diversified and will invest in companies in various industry sectors as diverse as semiconductors, software, retailing and restaurants and others that may be specialists in only one technology.

While high technology investment makes up most of the venture investing in the U.S., and the venture industry gets a lot of attention for its high technology investments, venture capitalists also invest in companies such as construction, industrial products, business services, etc. There are several firms that have specialized in retail company investment and others that have a focus in investing only in “socially responsible” start-up endeavors.

Venture firms come in various sizes from small seed specialist firms of only a few million dollars under management to firms with over a billion dollars in invested capital around the world. The common denominator in all of these types of venture investing is that the venture capitalist is not a passive investor, but has an active and vested interest in guiding, leading and growing the companies they have invested in. They seek to add value through their experience in investing in tens and hundreds of companies.

Some venture firms are successful by creating synergies between the various companies they have invested in; for example one company that has a great software product, but does not have adequate distribution technology may be paired with another company or its management in the venture portfolio that has better distribution technology.

Length of Investment

Venture capitalists will help companies grow, but they eventually seek to exit the investment in three to seven years. An early stage investment make take seven to ten years to mature, while a later stage investment many only take a few years, so the appetite for the investment life cycle must be congruent with the limited partnerships’ appetite for liquidity. The venture investment is neither a short term nor a liquid investment, but an investment that must be made with careful diligence and expertise.

Types of Firms

There are several types of venture capital firms, but most mainstream firms invest their capital through funds organized as limited partnerships in which the venture capital firm serves as the general partner. The most common type of venture firm is an independent venture firm that has no affiliations with any other financial institution. These are called “private independent firms”. Venture firms may also be affiliates or subsidiaries of a commercial bank, investment bank or insurance company and make investments on behalf of outside investors or the parent firm’s clients. Still other firms may be subsidiaries of non-financial, industrial corporations making investments on behalf of the parent itself. These latter firms are typically called “direct investors” or “corporate venture investors.”

Other organizations may include government affiliated investment programs that help start up companies either through state, local or federal programs. One common vehicle is the Small Business Investment Company or SBIC program administered by the Small Business Administration, in which a venture capital firm may augment its own funds with federal funds and leverage its investment in qualified investee companies.

While the predominant form of organization is the limited partnership, in recent years the tax code has allowed the formation of either Limited Liability Partnerships, (”LLPs”), or Limited Liability Companies (”LLCs”), as alternative forms of organization. However, the limited partnership is still the predominant organizational form. The advantages and disadvantages of each has to do with liability, taxation issues and management responsibility.

The venture capital firm will organize its partnership as a pooled fund; that is, a fund made up of the general partner and the investors or limited partners. These funds are typically organized as fixed life partnerships, usually having a life of ten years. Each fund is capitalized by commitments of capital from the limited partners. Once the partnership has reached its target size, the partnership is closed to further investment from new investors or even existing investors so the fund has a fixed capital pool from which to make its investments.

Like a mutual fund company, a venture capital firm may have more than one fund in existence. A venture firm may raise another fund a few years after closing the first fund in order to continue to invest in companies and to provide more opportunities for existing and new investors. It is not uncommon to see a successful firm raise six or seven funds consecutively over the span of ten to fifteen years. Each fund is managed separately and has its own investors or limited partners and its own general partner. These funds’ investment strategy may be similar to other funds in the firm. However, the firm may have one fund with a specific focus and another with a different focus and yet another with a broadly diversified portfolio. This depends on the strategy and focus of the venture firm itself.

Corporate Venturing

One form of investing that was popular in the 1980s and is again very popular is corporate venturing. This is usually called “direct investing” in portfolio companies by venture capital programs or subsidiaries of nonfinancial corporations. These investment vehicles seek to find qualified investment opportunities that are congruent with the parent company’s strategic technology or that provide synergy or cost savings.

These corporate venturing programs may be loosely organized programs affiliated with existing business development programs or may be self-contained entities with a strategic charter and mission to make investments congruent with the parent’s strategic mission. There are some venture firms that specialize in advising, consulting and managing a corporation’s venturing program.

The typical distinction between corporate venturing and other types of venture investment vehicles is that corporate venturing is usually performed with corporate strategic objectives in mind while other venture investment vehicles typically have investment return or financial objectives as their primary goal. This may be a generalization as corporate venture programs are not immune to financial considerations, but the distinction can be made.

The other distinction of corporate venture programs is that they usually invest their parent’s capital while other venture investment vehicles invest outside investors’ capital.

Commitments and Fund Raising

The process that venture firms go through in seeking investment commitments from investors is typically called “fund raising.” This should not be confused with the actual investment in investee or “portfolio” companies by the venture capital firms, which is also sometimes called “fund raising” in some circles. The commitments of capital are raised from the investors during the formation of the fund. A venture firm will set out prospecting for investors with a target fund size. It will distribute a prospectus to potential investors and may take from several weeks to several months to raise the requisite capital. The fund will seek commitments of capital from institutional investors, endowments, foundations and individuals who seek to invest part of their portfolio in opportunities with a higher risk factor and commensurate opportunity for higher returns.

Because of the risk, length of investment and illiquidity involved in venture investing, and because the minimum commitment requirements are so high, venture capital fund investing is generally out of reach for the average individual. The venture fund will have from a few to almost 100 limited partners depending on the target size of the fund. Once the firm has raised enough commitments, it will start making investments in portfolio companies.

Capital Calls

Making investments in portfolio companies requires the venture firm to start “calling” its limited partners commitments. The firm will collect or “call” the needed investment capital from the limited partner in a series of tranches commonly known as “capital calls”. These capital calls from the limited partners to the venture fund are sometimes called “takedowns” or “paid-in capital.” Some years ago, the venture firm would “call” this capital down in three equal installments over a three year period. More recently, venture firms have synchronized their funding cycles and call their capital on an as-needed basis for investment.

Illiquidity

Limited partners make these investments in venture funds knowing that the investment will be long-term. It may take several years before the first investments starts to return proceeds; in many cases the invested capital may be tied up in an investment for seven to ten years. Limited partners understand that this illiquidity must be factored into their investment decision.

Other Types of Funds

Since venture firms are private firms, there is typically no way to exit before the partnership totally matures or expires. In recent years, a new form of venture firm has evolved: so-called “secondary” partnerships that specialize in purchasing the portfolios of investee company investments of an existing venture firm. This type of partnership provides some liquidity for the original investors. These secondary partnerships, expecting a large return, invest in what they consider to be undervalued companies.

Advisors and Fund of Funds

Evaluating which funds to invest in is akin to choosing a good stock manager or mutual fund, except the decision to invest is a long-term commitment. This investment decision takes considerable investment knowledge and time on the part of the limited partner investor. The larger institutions have investments in excess of 100 different venture capital and buyout funds and continually invest in new funds as they are formed.

Some limited partner investors may have neither the resources nor the expertise to manage and invest in many funds and thus, may seek to delegate this decision to an investment advisor or so-called “gatekeeper”. This advisor will pool the assets of its various clients and invest these proceeds as a limited partner into a venture or buyout fund currently raising capital. Alternatively, an investor may invest in a “fund of funds,” which is a partnership organized to invest in other partnerships, thus providing the limited partner investor with added diversification and the ability to invest smaller amounts into a variety of funds.

Disbursements

The investment by venture funds into investee portfolio companies is called “disbursements”. A company will receive capital in one or more rounds of financing. A venture firm may make these disbursements by itself or in many cases will co-invest in a company with other venture firms (”co-investment” or “syndication”). This syndication provides more capital resources for the investee company. Firms co-invest because the company investment is congruent with the investment strategies of various venture firms and each firm will bring some competitive advantage to the investment.

The venture firm will provide capital and management expertise and will usually also take a seat on the board of the company to ensure that the investment has the best chance of being successful. A portfolio company may receive one round, or in many cases, several rounds of venture financing in its life as needed. A venture firm may not invest all of its committed capital, but will reserve some capital for later investment in some of its successful companies with additional capital needs.

Exits

Depending on the investment focus and strategy of the venture firm, it will seek to exit the investment in the portfolio company within three to five years of the initial investment. While the initial public offering may be the most glamourous and heralded type of exit for the venture capitalist and owners of the company, most successful exits of venture investments occur through a merger or acquisition of the company by either the original founders or another company. Again, the expertise of the venture firm in successfully exiting its investment will dictate the success of the exit for themselves and the owner of the company.

IPO

The initial public offering is the most glamourous and visible type of exit for a venture investment. In recent years technology IPOs have been in the limelight during the IPO boom of the last six years. At public offering, the venture firm is considered an insider and will receive stock in the company, but the firm is regulated and restricted in how that stock can be sold or liquidated for several years. Once this stock is freely tradable, usually after about two years, the venture fund will distribute this stock or cash to its limited partner investor who may then manage the public stock as a regular stock holding or may liquidate it upon receipt. Over the last twenty-five years, almost 3000 companies financed by venture funds have gone public.

Mergers and Acquisitions

Mergers and acquisitions represent the most common type of successful exit for venture investments. In the case of a merger or acquisition, the venture firm will receive stock or cash from the acquiring company and the venture investor will distribute the proceeds from the sale to its limited partners.

Valuations

Like a mutual fund, each venture fund has a net asset value, or the value of an investor’s holdings in that fund at any given time. However, unlike a mutual fund, this value is not determined through a public market transaction, but through a valuation of the underlying portfolio. Remember, the investment is illiquid and at any point, the partnership may have both private companies and the stock of public companies in its portfolio. These public stocks are usually subject to restrictions for a holding period and are thus subject to a liquidity discount in the portfolio valuation.

Each company is valued at an agreed-upon value between the venture firms when invested in by the venture fund or funds. In subsequent quarters, the venture investor will usually keep this valuation intact until a material event occurs to change the value. Venture investors try to conservatively value their investments using guidelines or standard industry practices and by terms outlined in the prospectus of the fund. The venture investor is usually conservative in the valuation of companies, but it is common to find that early stage funds may have an even more conservative valuation of their companies due to the long lives of their investments when compared to other funds with shorter investment cycles.

Management Fees

As an investment manager, the general partner will typically charge a management fee to cover the costs of managing the committed capital. The management fee will usually be paid quarterly for the life of the fund or it may be tapered or curtailed in the later stages of a fund’s life. This is most often negotiated with investors upon formation of the fund in the terms and conditions of the investment.

Carried Interest

“Carried interest” is the term used to denote the profit split of proceeds to the general partner. This is the general partners’ fee for carrying the management responsibility plus all the liability and for providing the needed expertise to successfully manage the investment. There are as many variations of this profit split both in the size and how it is calculated and accrued as there are firms.

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A key factor that leads one to become a successful entrepreneur would be actually growing up in the Silicon Valley. Andy grew up in Silicon Valley, with 2 entrepreneurial parents. So, dinner time conversation was almost always about business and technology during a very exciting time! Business and Technology have always been Andy’s passion and he spent his teenage years reading business books like Michael Lewis’ “Liar’s Poker” and “Barbarians at the Gate.”

Andy is also a coder, which lends to business success since coders do not have to rely on third parties to build their websites, business portals, databases, etc. This self reliance is key to building a successful business and is akin to a contractor building his own house. Andy founded, and was CEO, of eBenefits, a web based human resources service. At eBenefits, Kurtzig built a talented team, signed significant partnerships with Fortune 500 companies like Automatic Data Processing (ADP) and Marsh & McLennan, and raised $8 million of venture capital financing. He went on to sell eBenefits to an Inc 500 Company. Prior to starting eBenefits, Kurtzig founded ANSER to service and develop software for the newspaper industry. He holds a B.S. degree in Business Administration from the University of California at Berkeley. He is an angel investor in several companies including StubHub (acquired by eBay in 2007) and iLike.

Necessity being the mother of invention, Andy originally launched his most recent venture as a way to help his wife get answers about questions regarding pregnancy. His goal was to get legitimate answers to good questions. When you combine that with his strong business background, his location in the Silicon Valley and the ability to code his own software, you get JustAnswer.com.

JustAnswer® is a website where people go when they want an answer from a Doctor, Lawyer, Mechanic or one of thousands of third-party verified Experts one-on-one. Millions with questions come to the site for affordable and fast answers in more than 100 categories, ranging from Medical to Legal. Experts typically provide answers within minutes. Andy explained that there are experts in JustAnswer generating six figure incomes. Many earn less, but this has actual serious work from home, or your office, potential.

Every country’s economy has always been enhanced by the growth in its entrepreneurship; done so, with high return of investments (capital venture) at 100% or more. The start of the capital venture in the United States came about when a consequence of a very stiff structural restrictions in their banking system in the 1930s, resulted to deprive them of the private merchant industry that was uncommon to a highly developed nation such as the U.S.

The making of the Small Business Investment Act of 1958 paved the way to allow the U.S. Small Business Administration (SBA) to give licenses to the Small Business Investment Companies (SBICs) for purposes of providing financial assistance and management to small entrepreneurships especially to beginners in business all over the United States.

Thus, Capital Venture has been professionally acknowledged; although in 1946 its start was gird toward investing at Digital Equipment Corporation by the American Research and Development Corporation (AR&D), founded by General Georges Doriot, first American to promote the capital venture industry. Its tremendous success that made double investment capital in subsequent years elevated the rise of numerous other venture groups, that pushed licensing legal under the Federal laws, aforementioned atop this paragraph.

A number of associations and clubs were founded, and posted capital venture clubs/groups in various states, with respective visions to finance not only small-time business amateurs; but, invest bigger capital on some mining industries, manufacturing some latest technologies, projects in the educational system (schools), health affiliated structures, numerous clinical equipments, and many modern-day demand in novelties.

A close study on Northwest Arkansas concerning project breakthrough in infrastructures and highly trained-skilled manpower on the latest technologies, were aired out to their legislature. The unprecedented increase of population towards 2020 in this side of the U.S need a pressing inflow of financing that will be held as a subject to contend within, the right selection of capital venture investors to subsidize bulk of expense on researches, and to develop better-trained workers for the projects in focus.

Places in subject for these developments include the big cities of Knoxville, capital of Tennessee; Austin, Texas, and Huntsville, on which survey charts outpaced Benton and Washington counties in economic growth during the past 10 years. This has been relayed out by the Arkansas Capital Corporation Group as studies are held in forum on the economic outlook of the NW Arkansas.

The approval of creating the “Arkansas Capital Venture Funds” thru their legislature recently fronts best expectations of the opening of new businesses, and will be highlighted with the coming in of new private capital venture groups.

Pulling together of capitalization to the best advantage may even proceed to a better position to call the attention of the Universities around to increase the development of students on broad “research” that will eventually lead to open high-technology companies that may serve better opportunities on high-skilled, or better-paying jobs.