Business financing comes in many shapes and sizes. Gone are the days of walking into your local bank and asking for a loan to open your new venture. The financial industry has grown and acclimated to new environments over the years, and everyone in it has one goal in mind: make money. One way to make money is to invest in making money. What does that mean? It means that some investors give their hard-earned cash to businesses to help them grow and then reap the growth benefits, known as venture capital.
Venture capital tends to be more for established businesses. Investors who specialize in their niche look at a company within that niche’s plan for growth and then offer financing and advice. The most successful entrepreneurs will tell you that they couldn’t have made it big without networking, and venture capital financing is one way to ensure success by enlisting the help of others who have already achieved it. The business owner works with the investor, not against him or her. The owner becomes a sponge and allows the venture capitalist to help determine how the company is going to grow.
Investing in Innovation
There is one thing that first-world nations have in common: They are innovative. They have the tools necessary to push the boundaries of what their citizens understand to be the norm. They find ways to grow and prosper, and it is this innovation – this invention – that makes them successful in the world today. If you think about it, you realize the United States would not have become the United States without innovation, especially during the Industrial Revolution. Can you imagine conquering the West without the railroad? Innovation boosts economies, and it has throughout history.
Venture capitalists always look for the next great innovation, and this is one reason why experts predict this financing will continue to grow economies throughout 2018 and beyond. Many investors in the world are putting their money into venture capital financing, including Ripple, which just placed a huge chunk of change into a venture capital firm designed to promote the growth of blockchain technology and businesses that use it, which is the platform upon which cryptocurrency, such as Bitcoin, resides. Ripple even set up partnerships with MoneyGram and Western Union to grow the industry further.
Over the centuries as humankind has built societies, innovation has been a proven way to rise and sit at the top. After all, Bill Gates said decades ago that he wanted a personal computer in every household and people scoffed. He proved them wrong and changed the way the world communicates, conducts business, and educates. Gates opened the door for an entirely new job market, and information technology continues to grow. If a venture capitalist can see the vision of a Bill Gates, he or she can reap insane benefits from his or her investment. For example…
A Retired Investor at 42
If you had an estimated net worth of $1.2 billion in 2017, you’d be able to retire at 42 years of age, too. Chris Sacca made his money in part through venture capital investments. Sacca gave seed money to Kickstarter, Instagram, Twilio, Twitter, and Uber in their early stages of development, and his investment more than paid off. Sacca saw the vision of the people behind these businesses, and he invested in them and helped them to grow into the mega corporations they are today. Venture capital benefits the investor, too, and Sacca can kick back now that he’s a billionaire, although he’s probably keeping busy.
Other companies that made their venture capitalists rich are Amazon, Google, and Starbucks. Although venture capital financing tends to migrate toward the technology sector, other businesses also reap its benefits. Who would’ve thought that Jeff Bezos would become the richest man in the world by opening up an online commerce and cloud platform? Are you sitting down? As of Mar. 6, 2018, Bezos held a net worth of $112 billion, making him the first centi-billionaire. Maybe that’s why Donald Trump dislikes him so much. He should’ve invested in Amazon when the getting was good.
This isn’t to say the venture capital financing doesn’t come without faults. It does. In some cases, the venture capital investor loses his or her money. No investment is 100-percent guaranteed and that includes venture capital investments. It’s also bit chauvinistic. Although women-owned business startups achieve greater success than their male counterparts do, they receive a smaller percentage of venture capital funding. This is a huge loss to both the business owners and investors, as you would think the financers would finance the higher chances of success.
Nonetheless, venture capitalists help businesses throughout the world. With an emphasis on invention and innovation, the more venture capital invested into a local economy, the better the local economy. This funding vehicle has helped the conglomerates listed above and many others change the world and shape it into what it is today. Can’t wait to see what venture capital finances tomorrow.