The True Meaning of Venture Capital

First off, I just want to clarify that I’m not an expert when it comes to business, capitals, investments, and the like. In fact, I’m new to these things since I’m really not a business-minded person. But let me just share to you what I have learned so far and how did I understood it.



The first time I heard the term venture capital, the first thing that came to my mind was money and business. And as a newbie hearing this term, I was so excited to search for its meaning. I was expecting deep meanings for this term since I didn’t have the idea on hearing it for the first time. But I was shocked when I found out that venture capital is simply just a type of private equity, where in a capital will be given by a professional to new, and promising businesses. As I was not contended with what I learned as its definition, I started researching and found out a lot of things about it.



Venture Capital doesn’t start just now. However, General Georges Doriot is considered to be the father of modern venture capital industry. He founded the American Research and Development Corporation (AR&D). In the past, venture capital was only provided by wealthy families or famous individuals. It wasn’t even considered yet as a business. They were just lending money and in return, when the business has become successful already, they will pay back the money that they borrowed.



How this venture capital thing works? Venture Capitalists or VCs are the executives of the company or the investment professionals. Many of these VCs are former chief executives at companies similar to those partnership finances and other executives in technology companies.



Investors in venture capital composes of both high net worth individuals with large amount of capital, such as private funds, pensions, universities, foundations, and the like,



Other positions at venture capital companies include venture partners and entrepreneur-in-residence or EIR. They bring in the deals and receive income only on these deals that they work on. the EIRs are engaged by venture capital companies temporarily and are expected to develop ideas to their host company. Some EIRs accepts the roles of being a Chief Technology Officer (CTO) to some companies.



Venture capital is generally suitable for all business-minded persons. Capitalists are very selective to companies in which they will be giving the fund. Of course, they will most likely be in favor of those companies with a high growth potential. This is because of the required timeframe, typically 3-7 years to return the fund that has been borrowed from them. The higher the growth potential of the company, the sooner the capital will be returned to the capitalists.



At this point, we can assume that at least we know something about venture capital. But this is not just it. It’s a very broad topic that must be learned especially when we are serious in building our own business. There are lots of articles and Blogs about venture capital that is on the net and I encouraged that we learned from it because it will just not help us in finding a capital for a business, but the advantages and disadvantages in the business world.




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ITU Ventures provides investment opportunities to investors in the field of high-technology, and funding to high-tech startups primarily in the field of communications and semiconductors.