Some Thoughts on Trends and Maturity Patterns in UK Venture Capital, 1985- 1993
Venture capital is equity finance (the business risk-bearing class of capital) provided to unquoted businesses. Such investee firms can be started up, expanded, rescued, purchased as unquoted businesses, or become unquoted as a consequence of purchase using venture capital. Moreover, it can enable additional bank finance to be raised, usually of the traditional type (term, loans and overdrafts), which bears the credit risk but can form part of the purchase price. Equity is often said to be a relatively cheap source of funds in the early or critical stages of a business because dividends can be delayed or subdued until some future date. In the context of venture capital, this is usually related to achieving particular target levels of profit. The point at which the venture capital investor realises all or part of their claim is known as "exit". This can take several forms, including flotation on a stock market, selling to another company or "trade buyer", or selling to another venture capital investor.