Case Study Analysis of Venture Capital



Case Study Analysis of Venture Capital

Introduction

Investments in newly born companies are always considered a risky business decision by many investors providing venture capital. Such a risky decision is taken only after analyzing and collecting all the relevant information and assessing the potential risks and returns associated to the new business. In this regard, many investors who are involved in financing these new ventures could be banks, private corporations, venture capitalists, angel financers, prime brokers, trusts, credit unions, collective investment schemes, insurance companies or trusts (Acevedo, L., 2012). In order to avoid financial and investment risks, these investors and entrepreneurs may enter into a financial contract that addresses the rules and legislations pertaining to financing and control rights, authority and details of collateral, date stating effectiveness of contract, the extent to which information on business is exposed to investors, respective cash flows and discount rate applicable 

Question No. 1

The Venture Capital Market in USA has been predicted to face further difficulties and considered as a risky market with respect to current happenings. The VC market of USA has been successfully coping with the problems of finance faced by various entrepreneurs. It is evident by successful Initial public offerings arranged by Ventures that turned into successful public limited companies. The primary solution leading to successful transaction in the VC market is adequate election of business to make investment. It involves careful evaluation of risk and return associated to available opportunities. Secondly, VC strengthens the process with contracts that highlights the rewards for performing well, penalties in case of disagreement. It is also responsible for improving, adding value and assisting the companies in which they invest in form of overseeing and governing their performance. It also offers help with respect to strategy formation, recruiting, and introducing in the market ...