VENTURE AND PRIVATE CAPITAL, WHAT IS IT?
Venture (VC) or private capital (PC) is a way of holding the ownership right in the company or its share. Businessmen find this form of ownership useful, but they must transfer the company's shares for capital lending.
HOW TO BORROW FROM FUNDS?
A businessman usually has to apply to the VC/PC fund, which either invests capital directly or acquires companies in operation. Usually, VC/PC fund collects money and invests it into unlisted companies (i.e. companies, shares of which are not traded on the stock exchange) by acquiring a small amount of shares granting the controlling right for the period of three to seven years. The advantages of this type of financing usually are related with participation of the VC/PC fund in the investment portfolio company's board rather than with invested funds, when the managers of the VC/PC fund having excellent understanding of weaknesses and strengths of the company can conduct scrupulous inspection and thus share valuable contacts.