The venture business got its name from the English word “venture”, that is, “risky”. In other words, the venture capital business is a risky business involving scientific and technological investments.
For the first time, a venture business was formed in Silicon Valley, as an innovation and technology center in the United States. Gradually, it spread to most of the developed and developing countries of the world. Venture business allows you to effectively develop and use high technologies for the benefit of the country's economy. It is thanks to venture capital investments that the country can remain competitive in the field of innovations and high technologies. Venture business is understood as a special form of investment, which is fundamentally different from bank lending. Investments are most often made in small companies, private or privatized, whose shares are not listed on the stock markets and are owned by the company's shareholders. Venture investments are made: • in exchange for the shares of the invested company, • as a medium-term loan on special conditions, with a loan term of 3 to 7 years, • a combination of the above methods. Venture investments should be distinguished from strategic partnerships. Venture does not imply an attempt to acquire a controlling stake and take over the management of the company. The task of a venture investor is not to gain control over the company, but to stimulate the company's management to develop the company through the investments received, and, consequently, to increase financial performance. Venture business aims to maximize the company's profitability, growth of its quotations on the market. At the same time, it is in the financial sector that the key risks of venture investment lie. When investing their funds, the investor always risks to a certain extent that the work of the managerial staff will be ineffective. As a result, the investor loses the invested funds. On the other hand, with a successful investment, in 5-7 years the investor will be able to sell the acquired shares at a cost that is several times higher than the initial one. The venture business is beneficial for both parties to the agreement: the entrepreneur receives capital on favorable terms for the further development of his company, the investor receives financial benefits, of course, provided that the investment object is chosen correctly.
