Similar to the Business Angels financing model, this is a type of business financing through equity. So, Venture capital companies usually take a minority stake in the capital of a company providing financial support to its development, aimed at the realization of capital gains relating to future capital held. During this partnership commonly it is provided financial, administrative, economic and fiscal support. Additionally, these institutions act as intermediaries to obtain credits from banks.
This type of funding is targeted to support businesses without access to capital markets, with greater emphasis on SMEs. Although, Venture capital companies make larger investments than Business Angels which is more suitable for bigger companies with more complex plans.
- Access to financial, administrative, economic and fiscal support
- No need for collateral
- Large amount of financing might be available
- Owner may lose some control over business