What are venture capital firms?

18th Nov 2009 by Tom Lindmark

Venture capital firms are companies that manage venture capital funds. So the real question here is what is a venture capital fund. First, it's generally a private pool of money that is organized to invest in newer companies. The investors in this pool are generally wealthy as the investment minimums tend to be high and in order to comply with certain security regulations they have to pass a net worth test. The typical venture capital company tends to invest in start-up companies or companies that have been in existence for a short period of time. Usually, these companies aren't yet making any money or making enough money to sustain themselves though sometimes venture capital funds will make investments that allow for a major expansion of the business. Though it's not always true most venture capital companies tend to invest in technology based companies.

This answer is the subjective opinion of the writer and not of FinancialAdvisory.com