Entities offering VC invest in a company until it attains a significant position and then exits the same. In an ideal scenario, investors infuse capital in a company for 2 years and earn returns on it for the next 5 years. Expected returns can be as high as 10x of the invested capital.
Financial venture capital can be offered by –
- Venture capital firms,
- Investment banks and other financial institutions,
- High net worth individuals (Angel investors), etc.
Venture capital firms create venture capital funds – a pool of money collected from other investors, companies, or funds. These firms also invest from their own funds to show commitment to their clients.