CAPCO (Certified Capital Company) which started in 1976, by using a tax credit they were able to begin their investment. They invested so much money in companies in the New York State. Most of their investments were technology companies, service and manufacturing. These investment in turn have helped to get more jobs, making the economy stronger. To date they are still making their presence known. Reports indicates that CAPCO programs have already invested $150 million in 117 companies across the State.
So, let’s learn a little more about venture capitalists and their role in creating more jobs and success. We know that venture capitalists make investments in up and coming young companies, in exchange for equity. But these loans come with a high price. These capitalists also help entrepreneurs to move along with their dreams. Banks offer loans, but they want interest on the initial loan, but also hesitated to invest on a small business because of high risk.
Venture capitalist are wealthy investors who put their money in a business. Some may even come with a rate as high as 30 percent. By the capitalists taking an equity position in the company, the business does not have to pay out cash, but they do have to hand over a large part of the business to get Venture capital backing. But in doing so, most companies don’t find that it all that bad.
Venture capitalists look for companies that may be on the verge of being sold. They keep an eye on companies that they think may have potential in the long run, or a company that may be taken over by a larger company.
Let us discuss a few different types of venture capital:
- Private risk capital: They scour for companies that can make more than 40% on their investment. Most of the time they will get deeply involved in the business. They have large amounts of money to invest.
- Banking firms: They will sell the company’s stocks to the private and public investors.
- Informal Venture: They would offer the company money. Then they may offer his advice or other individuals the business can refer too. A lot of entrepreneurs like the idea of this. They not only get the money, but on-going advice as well.
If a company is looking for Venture capital, their best bet is through other businesses that have already done so. The statement that says, it’s not what you know, it’s who you know works well too.