Structure Of Venture Capital Funding Firms
The prime focus of this page is to look into the structure of Venture capital funding firms.
which are typically structured as partnerships. The purpose of venture capital is to support companies with liquid shares, providing a rate of return to the investors which is constant with the level of risk taken. Read on to know more on the Venture capital funding firms’ structure.
The general partners of Venture capital funding firms serve as the managers of the firm and as well as investment advisors for the capital funds raised. The structure of Venture capital funding firms, as limited liability companies, has the firm's managers to be known as managing members. The investors in venture capital funds are acknowledged as limited partners. This constituency consists of both high net worth individuals and institutions with big amounts of available capital. For example, the state and private pension funds, , foundations, university financial endowments insurance companies, and pooled investment vehicles. These are called mutual funds or funds of funds.
The venture capital funding firms make investments in the private equity of operating companies. An array of loosely affiliated investment policies including leveraged buyout, growth capital and venture capital are employed. Each firm is supposed to raise funds for investing as per with one or more specific investment tactics. Raising pools of capital, the venture capital funding firms receive a periodic management fee as well as a share in the profits earned.
Learning more about Venture capital funding firms, these firms, along with their investors, obtain a minority position in a company and then work to maximize the value of that investment. These firms generally obtain a return on their investments through one of the following:
· Initial Public Offering (IPO) - shares of the company are offered to the public
· A merger or acquisition – selling the company for either cash or shares
· Recapitalization - cash is shared out to the shareholders