Exploring Financial Principles of Venture Capital & the Finance of Innovation
Vo, Thinh (2020)
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Lataukset:
Vo, Thinh
2020
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2020120426079
https://urn.fi/URN:NBN:fi:amk-2020120426079
Tiivistelmä
This thesis is a product-based study, and its main objective is to research about significant elements and components regarding venture capital as well as finance of innovation, in which the element playing a key role is Research and Development (R&D).
In recent decades, venture capital has emerged as a spectacular phenomenon with the appearance of many potential start-ups along with the development of advanced technologies that allow investors to easily approach and execute business deals with the entrepreneurs in order to create profits for themselves. Venture capitalists (abbreviated as VCs) are a special kind of investors who are willing to take more risk of loss, but also higher rate of return by investing in start-ups companies. Before funding a business, VCs usually base on their own list of investment criteria along with their subjective opinions about the future development of the enterprises. Besides, it is also significantly vital for the VCs to take a special concern about corporate finance challenges in the organization. The main reason stands behind this is the necessity for estimating cost of venture capital, which stands a precise rate of return required by venture capitalists when performing joint-venture with the start-up businesses.
The second concern discussed is the importance of R&D to innovation in business organizations, especially start-up companies. It is possible to argue that R&D is the most powerful tool for small and medium-sized enterprises (SMEs) to compete against other big corporations in the same market, since it supports the entrepreneurs in the process of integrating new ideas and concepts that are critical for the innovation. Historically, governments around the globe has always encouraged the enterprises to focus more on R&D spending due to its significant impact on the economic growth, and this tendency seemed to relentlessly increase until the post-period of the 2008 financial crisis when plenty of business organizations started to switch from R&D innovation to share buybacks funding with the purpose of looking more attractive to investors.
In recent decades, venture capital has emerged as a spectacular phenomenon with the appearance of many potential start-ups along with the development of advanced technologies that allow investors to easily approach and execute business deals with the entrepreneurs in order to create profits for themselves. Venture capitalists (abbreviated as VCs) are a special kind of investors who are willing to take more risk of loss, but also higher rate of return by investing in start-ups companies. Before funding a business, VCs usually base on their own list of investment criteria along with their subjective opinions about the future development of the enterprises. Besides, it is also significantly vital for the VCs to take a special concern about corporate finance challenges in the organization. The main reason stands behind this is the necessity for estimating cost of venture capital, which stands a precise rate of return required by venture capitalists when performing joint-venture with the start-up businesses.
The second concern discussed is the importance of R&D to innovation in business organizations, especially start-up companies. It is possible to argue that R&D is the most powerful tool for small and medium-sized enterprises (SMEs) to compete against other big corporations in the same market, since it supports the entrepreneurs in the process of integrating new ideas and concepts that are critical for the innovation. Historically, governments around the globe has always encouraged the enterprises to focus more on R&D spending due to its significant impact on the economic growth, and this tendency seemed to relentlessly increase until the post-period of the 2008 financial crisis when plenty of business organizations started to switch from R&D innovation to share buybacks funding with the purpose of looking more attractive to investors.