Venture business: risk – a noble cause

Venture investment, creating a technological boom, has given life “new economy” and to ensure America indisputable advantages in the construction of post-industrial society.

The young and have potential for growth companies are always in need of funding, especially in the early stages of development. But with no operating history and stable financial position, they can not count on receiving funds from traditional sources such as bank loans or placement of securities to the public financial markets. Therefore, for young companies are often the only solution to shortage of funds is to find venture capital investor.

The most common definition of venture capital – funding private business capital of the project, the successful implementation of which is not guaranteed. In the absence of safeguards such investments involve a high degree of risk and therefore are also called “risky”. Historically, the most interesting objects for the application of venture capital were small innovative company focused on developing and bringing to market high-tech products based on high technology, venture capital funding so often associated with direct investments in the company is the tech sector.

Who is Who in the venture capital market in the U.S.

Prior to the 70-ies of private companies received funds to develop mainly from wealthy individuals who wanted to support promising initiatives and in case of their success to get a good return on invested capital. In the late 50-ies in California began to appear private investors who financed the companies involved in high technology *. Investments in the commercialization of scientific and technological developments have been so profitable that investors were from one-time and random transactions move to the system search for promising young companies in need of funding. His first venture capital firm, ie institutional venture capital investor, has appeared in the U.S. in 1946, it became American Research and Development, which is to invest venture began using the pool, which were combined money of several private investors.

* The following is a history textbook. In 1957, one Arthur Rock, an employee of the investment bank in New York, received from his friend, a specialist in semiconductors, a letter to find an investor willing to finance development and production of new silicon transistors. Of the 35 potential investors, which held talks Rock, responded to the invitation only, Sherman Ferchayld. The result was a company Fairchild Semiconductor, became the mother of all U.S. semiconductor companies, their founders get rich, and prompted them to promise risk investments in small innovative companies. The same rock after the success of its first transaction has decided to devote himself to venture capital investment. He has participated in financing many of today world-renowned companies, including Apple and Intel.