What are venture funds

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:42

Venture funds are organizations that invest their financial capital in projects or any enterprises at the initial stage of their development and formation. It is important to note that not every such investment turns out to be profitable in the future. According to statistics, about 80% of all investments in practice are unprofitable. However, the remaining 20% are so profitable that they fully cover the initial costs and bring significant profits later.

Venture funds. History

This type of business was first finally formed in the United States in the 1980s. This kind of innovation was primarily associated with scientific and technological progress, which at that time dominated the whole world, as well as with the rapid development of the electronics field. By about the mid-1980s, there were about 650 investment organizations of this type in the United States of America. Moreover, some state governments were looking to help start-up firms and began to join the ranks of venture capitalists. According to experts, in 1987, venture capital funds were at the peak of their funding. The total investment wasabout 4.5 billion dollars.

Venture funds today

At the moment, the so-called "venture financing" is increasingly resorting to small projects called "startups". Most often these are small companies, the staff of which sometimes does not exceed 10 people. They come up with an idea and go with it to venture capital funds across the country. Then the experts make a decision and approve the application or, conversely, reject it. In the first case, the fund begins to fully finance the project. The market success of this kind of small companies primarily lies in their rapid growth. After some time, a small startup can capture an impressive market share, for example, if the initial idea was related to the latest technologies. On the other hand, as noted above, only a few such companies survive in the market. Among the most famous and at the same time successful projects, experts call Apple, Xerox and Intel. Judging by the success of these projects, one might think that this kind of practice is really expedient.

Russian venture funds

As for our country, the situation here is not so optimistic. The thing is that Russian venture funds started their work relatively recently (compared to America). It is important to note that such experience is new for our state, and only a few are willing to risk their investments. Despite disappointing forecastsspecialists, entrepreneurs still try to invest their finances in start-ups. Probably, in the near future, this industry will receive a new round of development in our country.

Runa Capital

Runa Capital is currently the most popular Russian venture capital fund. Its founder Sergey Belousov has already managed to bring such brands as Rolsen and Parallels to the world market. It is believed that this company has become popular and quite successful only thanks to a strong marketing component. The fund invests about 10 million dollars, but its share subsequently ranges from 20 to 40%.