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1. Brief history and definition of Venture Capital;2. Corporate structure and operation;3. New sector of investment and conclusions

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It’s a private funding used to support risky new business and speculative ventures, usually with high growth potential.

A typical venture capital investment usually involves the business owner giving up equity to venture capitalist in return for funding.

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Venture Capitalists are investment firms that makes venture investment, providing capital for start-up or expansion.

They are looking for higher rate of return, bringing their managerial abilities to small businesses with great potential growth.

Business Angels are private investor with huge personal capital, looking forward to invest their money in business which are not helped by financial institutions because are too risky.

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Venture capital firms are typically structured as partnership;

This comprises both high net worth individuals and institutions with large amounts of available capital, such as state and private pension funds, university financial endowments, foundations, insurance companies, and pooled investment vehicles, called fund of funds or mutual funds

VC firms in the United States may also be structured as limited liability companies, in which case the firm's managers are known as managing members.

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Venture capitalists are typically very selective in deciding what to invest in;

Funds are most interested in ventures with exceptionally high growth potential,providing the financial returns and successful exit event within the required timeframe (typically 3–7 years) that venture capitalists expect.

Young companies to raise venture capital require a combination of innovative technology, potential for rapid growth, a well-developed business model, and an impressive management team.

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This sheme meets businesses having large up-front capital requirements which cannot be financed by cheaper alternatives such as debt.

Intangible assets such as software, and other intellectual

property, whose value is unproven,explains why venture capital is most prevalent in the fast-growing technology and life sciences or biotechnology fields.

Venture capitalists are expected to nurture the companies in which they invest, in order to increase the likelihood of reaching an IPO stage when valuations are favorable.

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According to the development of the company, there are three types of financing with venture capital:

1. Early2. Expansion and development3. Acquisitions and restructuring

To analyze these points, they can be divided in several subgroups in order to stress the fact that every step in a company lifetime involves a different approach by venture capitalists.

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Time of exit from the firm’s capital is almost never predetermined, but depends on the development of the company.

In successful cases, divestments take place when the company has reached the level of expected development and the value of the company and thus the membership, has consequently increased.

Disinvestments happens when the conviction that is no more possible to solve the situation created takes hold.

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There are several ways of disinvestment, depending on the type of business and operations previously put in place and on results achieved. Typical channels used by investors to sell shares in their possession are:

1. the IPO of the subsidiary titles2. sale of the securities to another firm or to another

institutional investor;3. the repurchase of the participation by the original

business group 4. the sale to new and old members, resulting from

the merger of several companies in the meantime achieved.

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• Companies are not quoted on a stock exchange – they are “unquoted”

• Ownership of the business is typically restricted to a few individuals.

Family connection between the shareholders

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Small companies rarely have a long history or successful track record that potential investors can rely on in making an investment;

Larger companies can easier have access to the international finance;

Banks are particularly nervous of smaller businesses due to a perception that they represent a greater credit risk;

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A common problem is often that the banks will be unwilling to increase loan funding without an increase in the security given.

Problem of uncertainty relates to businesses with a low asset base. These are companies without substantial tangible assets which can be use to provide security for lenders.

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Focus on high potential growth small companies;

It makes research on the company and it builds a business plan fot the small company;

Often venture capitalists buy company and after restiring them,they sell them at an higher price.

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A business angel is an affluent individual who provides capital for a business start up;

Usually in exchange for convertible debt or ownership equity;

A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital.

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Sectors of investment

Solar and geothermal energies represent two fixed points for investments;

By the way, in recent years wind energy became the top ranking, achieving the status of most actractive technology among renewvables energies.

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ConclusionsFrom the previous table we noticed that venture

capitals prefer to acquire energy companies that already own high skills;

This tendency is becaming quite the opposite in this last years because of the improving of new technologies that allow to manage better the risk of borning firms.

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