Sources of Funds - Finance
Venture capital, with combining risk financing along with marketing assistance and management, could become an effective instrument in fostering developing countries. The experiences of improved countries and the detailed case learning of venture capital although, indicate such the following elements are utilized for the success of venture capital in any country.
- A broad-based or/and less family based entrepreneurial traditional societies and government encouragement such for enterprise, creativity and innovations.
- A less regulated and controlled business and economic environment where an attractive customer chance exists or could be created from high-tech and quality products.
- Existence of disinvestments mechanisms, particularly over-the counter stock exchange catering for the requirement of venture capitalists.
- Fiscal incentives that render the equity investment more develops and attractive 'equity cult' in investors.
- A more common, business and entrepreneurship learned about education system whereas engineers and scientists have knowledge of accounting, finance and accountants and economics understand physical sciences or engineering sciences.
- An effective training programme and management education for developing professionally competent and committed venture capital managers; that they must be trained to manage and evaluate high technology, high danger ventures.
- A vigorous development strategy, promotional efforts and marketing thrust employing new concepts such as venture fair clubs, venture networks, business incubators so on.. for the growth of venture capital.
- Linkage between technology/universities institutions, industry, R & D. Organisations and financial institutions include as venture capital firms.
- Encouragement and funding or R & D via private public sector companies and the government for certain technological competitiveness.
Disadvantages of Venture Capital
- Dilute control of a firm
- Dilute ownership position of a firm