Venture Capitals

A Venture capital or VC is a financial company (private equity) which provides funding opportunities to high growth-potential start-ups. These start-ups may be on an early-stage or on a later stage of development. Usually, venture capitalists are focusing on high growth industries like the online industry. The funding choice of a venture capital is ideal for new companies that are dynamic but too small in order to raise funds in the capital markets. Important roles in a Venture Capital except for the management include:

  • Venture Capital Management (they get paid from investors and receive an annual fee of 1-2% of the total capital plus a performance incentive 10-20% of the venture capital profits)
  • Venture Partners — (they are employees tracking potential investment opportunities)
  • Principal — (they are experienced employees in a particular field like investment banking of business consulting)
  • Associate — (below principal, it is an apprentice position)
  • Entrepreneur-in-Residence (the EIR are experts in performing due diligence to particular types of industries)

 

How a Venture Capital Choose Partnerships

A venture capital is focusing on a business model, management, innovation, technology, projected growth and projected cash-flows. A venture capital does not focus on projected dividents as venture capitals usually sell their equity before a company enters the dividend period. The common timeframe of a venture capital is from 3 to 7 years. Venture capitalists carry out precise due diligence before they enter a company’s share capital and they give extra weigh to the past-consistency of the company’s management.

There are 5 main stages regarding business development:

  • Business Idea
  • Start-up Foundation
  • VC Entrance
  • Start-up Expansion
  • VC Exit

» Find US Government Funding Programs

 

Our Tips for the Ideal Business Plan to Fund your Start-up

A solid business plan should consist a brief analysis of the industry and the business model, a brief presentation of the proven experience of the management team, high projected growth and cash-flows analysis for at least 5 years ahead. The average projected IRR (internal rate of return), should be at least 30%. Don’t try to promise to deliver things you will not able to justify. Be precise and accurate especially as concerns the fixed cost and in order to project future growth use at least 3 different scenarios. Here are some good tips for the ideal business plan:

1) Describe briefly the growth opportunities of the industry by giving weight into future technological developments

2) Describe how the management team has the experience and the capabilities to serve that industry better than the competition already does.

3) Present at least 3 scenarios describing future growth (basic scenario, unfavorable scenario, and optimistic scenario)

4) Cost analysis: Divide Cost into Fixed and Variable and evaluate the Cost Per Unit and the Marginal Cost

5) Make a reliable cash flows analysis for 5-10 years ahead.

 

HF Social

 

Major Global Venture Capitals List

1) 3i Venture capital, Visit 3i

2) Accel Partners Venture capital, Visit Accel Partners

3) Advanced Technology Ventures, Visit Advanced Technology

4) Alta Communications Venture capital

5) Alta Partners Venture capital, Visit Alta Partners

6) American Research and Development Corporation

7) Ardesta Venture capital, Ardesta at Bloomberg

8) Atlas Venture Capital, Visit Atlas VC

9) Austin Ventures, Visit Austin Ventures

10) Azione Venture Capital, Visit

11) Battery Ventures, Visit Battery Ventures

12) Benchmark Venture Capital, Visit Benchmark

13) Bessemer Venture Partners, Visit Bessemer Venture Partners

14) Bootup Labs, Inc

15) Brentwood Associates, Visit Brentwood Associates

16) Burr Egan, Deleage & Co. Venture capital

17) Canaan Partners Venture capital, Visit Canaan Partners

18) Carmel Ventures, Visit Carmel Ventures

19) Charles River Ventures, Information

20) Clearstone Venture Partners, Visit Clearstone Venture Partners

 

■ Giorgos Protonotarios, Financial Analyst / Business Planner

Contact: This email address is being protected from spambots. You need JavaScript enabled to view it.

Linkedin: https://www.linkedin.com/in/qexpert/ 

 

Read more: US Ventures Early-Stage | US Ventures Later-Stage | Venture Capitals Stocks

 

Stock Markets Report 2012

2012 WFE Market Highlights

Here is the annual report of the Global Organization WFE (World Federation of Exchanges) regarding the year 2012.

EQUITY & DERIVATIVES TRANSACTIONS

2012 has proved a challenging year for world exchanges as the volumes of all  products traded on WFE members were -22.5% down in equity transactions (USD 49 tn) and -20% fin the derivatives transactions (14.9bn of equity and interest rates contracts traded). Cash markets continued to suffer from the relative disaffection for equities; derivatives markets were affected from the continued low interest rate environment and the significant decrease of volatility, both factors reducing hedging needs.

OTHER FINANCIAL PRODUCTS

Other financial products traded in WFE exchanges also experienced very sharp declines of turnover value:

 ETFs : -31.6% (USD 7.3 tn)

 Securitized derivatives: -43.3% (USD 652 bn)

 Bonds: -20% (USD 26.1 tn)

MARKET CAPITALIZATION

On a more positive note, the only indicator growing was the market capitalization. After the sharp decline observed in 2011 during the summer, it recovered in 2012 with a 15% growth rate, getting back to its end-of 2010 level. Number of listed companies remain stable at 46 332 (-0.8%).

Equity Markets Capitalization USD 55 tn (+15.1%)

BEST PERFORMER

The best performance in 2012 was observed in the Americas (+17.2%) followed by Asia-Pacific (+15.4%) and EAME (+11.6%).

i) Americas

In the Americas, the growth was mainly driven by the US exchanges that increased 19% while Canada increased slightly less (8%) and contrasted trends were observed in Latin American countries.

ii) Asia-Pacific

In Asia-Pacific, the highest growth rates were observed in Thailand (+45%), Philippine (+39%), Singapore (+28%), Hong Kong (+25%) and India (+25%) and relatively lower growth rates occurred in mainland China and Japan (respectively +8% and +5%).

iii) AfricaMiddle East

In EAME, Africa Middle East region experienced a 20% growth rate, eurozone increased 14% while the LSEG in the UK rose 4%.

NUMBER OF LISTINGS

In 2012 the total number of listed companies on WFE exchanges was steady (-0.3%): -0.4% in Americas, +0.9% in Asia-Pacific and -2.2% in EAME.

Number of listings      46 332       -0.8%

Despite the good performance of market capitalization in 2012, Electronic Order Book (EOB) turnover value declined by 22.5%. All the regions were affected by this trading volumes drop: EAME (-24.1%), Americas (-23.2%) and Asia Pacific (-20%).

Value of share trading USD 49 tn      -22.5%

AVERAGE TRANSACTION IN 2012

In 2012, the average transaction size (weighted by value of share trading) slightly increased from USD

8 100 to 8 300. In the EAME region the average transaction size followed the Americas trend and stopped decreasing. Though we are lacking more detailed figures, this could be an indication of the slowdown in activity of algorithmic trading (including HFT) in this region. The average transaction size in Asia Pacific is still below the WFE average indicating a very active retail market.

CONTRACTS TRADED

For the first time since 2004, the number of equity derivative contracts traded on exchanges decreased in 2012 (-21%). Index products were the most affected: -39.6% for stock index options, -20.3% for ETF options, and -14.1% for stock index futures.

Number of contracts traded     14.9 bn    -20.3%

This significant decrease in stock index options was partly explained by the sharp decrease of number of index options traded on Korea Exchange following the multiplication by five of the size of the newly listed contracts on KOSPI 200 since March 2012. Excluding Korean index options, the decline in stock index options was -9.4%. And the overall decline in equity and IR derivatives was -11%.

This decline in equity derivatives mirror the one in the value of cash equities traded and is also probably explained by the significant decrease in volatility observed in 2012. Volatility indices decreased significantly in 2012, except in Japan, to end the year at relatively low levels.

 S&P 500 Volatility (VIX): - 23% (13.02)

 EURO STOXX 50 Volatility: -33.6% (21.35) and FTSE100 Volatility Index: -19.7% (18.05)

 Nikkei Stock Average Volatility Index : + 4.5% (22.45) and HSI Volatility Index : -30.2% (17.19)

The volume of Interest Rate options and futures traded also decreased significantly in 2012 (-17%). Factors generically seen as unfavorable for interest rates derivatives (low interest rates environments, no economic growth and credit expansion) continue to prevail in certain regions and could explain that trend.

OTHER FINANCIAL PRODUCTS

Bonds

After two years of significant increase, Bonds trading also declined in 2012 (-20%).

Bonds (cash markets) Turnover value           USD 26.1 tn     -20%

ETFs

A sharp decrease (-31.6%) on the turnover realized in 2012. The decrease was mainly due to the United States performance (-33%) which represents 83% of the WFE total turnover.

Turnover value    USD 7.3 tn    -31.6% Listings         7 721    +12%

Securitized derivatives

Securitized derivatives listings continued to grow (+16.2%), but overall volumes declined sharply (-43.3%)

Turnover value USD 652 bn USD     -43.3% Listings 1 263 492       +16.2% 

Read more: Stock Markets Report 2012

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