What is Venture Capitalism
- Venture capital is money or other resources called capitol, which is invested in a project in which there is a substantial element of risk, typically a new or expanding business.
Who's Investing
- Venture capital is generally provided by individuals with high net worth.
- These individuals are called "angel investors"
- The angel will then become an involved partner in the company.
- Capital is also sometimes provided by venture capital firms (VCFs), which similarly provide capital to entrepreneurs and start-ups.
- Angel investors and VCF's invest in the company in exchange for equity in the company.
- Equity is ownership of a percentage in the company.
- For example, an investor may invest $250,000 in a company in exchange for 15% of the company.
- This means that 15% of all profits will belong to the investor.
Shark Tank
- Shark Tank is a show that gives a great example of venture capitalism.
- Entrepreneurs go on the show and pitch their ideas to a group of diverse, multi-millionaires.
- The "sharks" come from many different backgrounds, such as fashion, and technology.
- The sharks can either make an offer, or pass on the deal if they're not interested.
- The show has won many awards, and has been running for several seasons.
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