Venture capital funds are financial resources invested in the equity of unlisted, newly activated or existing companies. The suppliers of the resources, called venture capitalists, can be individual capitalists, sometimes called angel, private companies, public financial institutions of territorial development, on a national or regional scale, or closed-end investment funds.
The immediate purpose of the investment is to make available to an inventor, an entrepreneur or a manager, the financial resources necessary for its development, in a phase in which neither the banking system nor the stock exchange system is likely to intervene, given the high uncertainty of the transaction. In addition to financial resources, the v. capitalist provides skills and support in relations with institutions and financial markets, with local authorities, with development agencies, and where administrative-accounting and promotional support is also needed to fill the entrepreneur’s shortcomings or, however, to allow him to concentrate entirely on its activity without other concerns.
The purpose of Venture capital. The investment aims to achieve reasonable earnings (a capital gain) from when the achievable investment is mobilized to when the development objective is reached, within a period ranging between two years and four years from the initial transaction.
It is a question of singularly high-risk initiatives, therefore with a high probability of losing a significant part of the investment, which is offset by the very high profits obtained in successful cases.