Organisations and the financial system
Organisations and the financial system

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

Free course

Organisations and the financial system

2.4 Venture capital

Venture captains in the business environment are called venture capitalists (or VCs). VCs are structured firms that invest previously collected funds in an ambitious project (i.e. a venture). VCs differ from BAs, as the former invest their funds through a managed fund (called a Venture Capital Trust), which is established using either private or public resources. The fund is managed in order to make a return for the fund’s investors. Compared to the structure of BA investment, VC investment carries substantial administrative costs, such as management fees, and organisational expenses, like consulting and research. In addition, the fund needs to sustain a consistent return for the investors. For these reasons, VCs will be more selective and prefer projects with a track record of good performance. Hence, VCs generally become involved with projects that are more mature than the ones targeted by BAs.

VCs usually invest sums above £1 million and expect high returns, as well as direct and constant involvement in the decision-making process within the business. As in the case of BAs, businesses agreeing to VC funding should be prepared to lose part of their equity control over the business. In Europe, the UK stands out as the major market for VC funding that finances growing businesses.

B294_1

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371