Venture capital firms are firms that provide funds to start-up ventures, often well before anyone else would be willing
to invest. In exchange for these funds, the firms often take an active role in running, or at least overseeing, the venture.
They can provide a wealth of information to a beginning entrepreneur and may make the difference between a good idea and a
But venture capitalists tend to be very protective of their investments. They are likely to keep a very close
eye on the business, and because they know the business may not be able to obtain needed financing elsewhere, they
may request a significant portion of the voting shares of the company. Whereas most sources of capital are profit-oriented,
with some venture capital firms looking for an overall 30 percent to 50 percent annual return on investments, other
sources seek only to create jobs and promote economic development. Most venture capital firms have certain areas of
investing expertise, preference and concentration that may be based upon geographical location, size of investment,
and/or industry or product types. It is very helpful to talk with someone who works with venture capital firms to which
firms, based on their expertise, may be compatible with the business seeking the capital.