On the other hand, though, some new businesses might turn to venture capital firms because they actually do need someone who knows more about running a business than they do. I don't think most start-ups would prefer to be in charge of everything if possible. If someone is willing to come to a venture capital firm and hand over part of the responsibility for their company to the firm, then it is probably because they couldn't find private capital from other sources. Also, if they are taking on all this extra risk of start-up businesses that have been turned down by other lenders, there are clearly cases where a business will fail, and they will never get their money back, so they have to make up for that somehow.Īs far as firms in general, what are the top venture capital firms? Are there any common ones that I may have heard of, or are they generally low key businesses that aren't in the mainstream? matthewc23 January 29, - I don't know if it is a steadfast rule, but I am willing to say you're probably right. I would almost have to think they get some sort of extra payment given their increased role. How are venture capital firms usually compensated for their work? Obviously, they would get repayment of their loan, but is there anything else? Are the loans from a venture capital firm on par with those from a bank, or are they usually a little higher? Given a venture firm's involvement in the business, I am willing to guess that they also get a certain percentage of any profits. I am curious if smaller venture capital companies exist to support small businesses like new restaurants and things like that. I am really only familiar with the major companies, though. Most of the leading venture capital firms won't take any new business that they don't think can get to a point of earning several million dollars a year very quickly. Because of that, it is imperative that the companies have great ideas that can make a lot of money quickly. They want to make sure that they have plenty of time to devote to make the projects successful. The companies are very selective, and only take 4 or 5 new projects a year. I think it should be said, too, that most venture capital firms won't take just anyone, even if they do have a good idea. It isn't surprising, though, that the vast majority of them are located in California where there are a lot of computer related start up companies. Titans62 January 31, - I don't think most venture capital firms are well publicized.
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