Venture Capitalists

Venture Capitalist (VC) companies form as limited partnerships. They pool money collectively that a committee of investors use to fund promising looking upstart, early-stage, and emerging companies. The VC company takes on the role of general partner, while the investors take on the role of limited partner. Typical investors include Pension Funds, Corporate Pensions, Insurance Firms, Non-profit Foundations, and even wealthy individuals.

VC is an option for companies that are too small to raise capital in the public markets. Typically, these same companies need VC money because they can’t secure a bank loan or cannot complete a debt offering. Also accompanying the capital investment of the VC firm is the expertise, business analytics, business contacts, talent acquisitions, and marketing potential of its members.

VC firms take heavy losses sometimes, but diversity keeps them profitable. VC firms will often invest in companies that are too high risk for mutual funds. The acquisition of shares in a company means that the VC firm gets a say in the direction the young company takes. This may some day payoff for the VC firm as the company matures and turns major profit.