Venture Capital Investments: Why Invest an Investor?
Venture capital is a proven financial tool for making money on high-tech companies. For startups, such investments are perhaps the only way to realize their ideas and enter global markets.
The principle of venture investment is simple: you should select promising projects and allocate funds for them. At the same time, it should be realized that most of the projects that initially seem to be workable will die at the start. Nested such firms will never return. The same startups that are realized will more than pay back the losses and make a profit ten times higher than the initial contributions.
In different regions, the process of venture investment is different – the number of funds, companies, and amounts of investments.
Venture Capital Investments – The Differences between America, Europe, and Asia
North America, including the United States and Canada, is the most developed venture capital investment market in the world. Only funds here are more than in 1500.
In general, organizations that invest funds are classified according to the volume of investments and the stages at which financial investments are made. Large funds are interested in IPO projects. These are innovative companies, many of which have been on the market for more than 10 years. The average investment ranges from 100 to 500 million dollars. In particular, funds such as General Atlantic are investing in late-stage companies.
The second type of organizations, from which startups can receive funds, also invest in already-promoted projects. However, the average check does not exceed $ 50 million.
Finally, the third type of fund finances at the crop planting stages. A promising organization that has an interesting idea, but not a finished product, in the American market, can get 15-20 million dollars.
The main difference between Europe and America is the absence of large funds of the first type. Most organizations invest 10-20 million. In general, it is noted that the European market is more conservative and fragmented. Many funds are regional, that is, designed for only one country. There are international ones among them.
In Asia, there are just over 150 foundations. However, seeing the development prospects, international organizations appear in the region. A characteristic feature of the Asian venture capital market is that government structures are actively involved in the process. For example, many startups in Korea and China turn to the authorities for the means first and often receive positive feedback. Funds created with the Singaporean and Malaysian governments are active. Trades usually do not hit volumes, but there are exceptions. For example, the Grab service, covering almost the entire Southeast Asia, in 2017 alone attracted two and a half billion dollars.