How is the venture capital ?

Venture capital refers to an investment, which is used under the risk of loss for the financing of a young company.
The term Venture Capital originated in the German-speaking world and can be translated with venture capital or venture capital into German. Often synonymous simply use the abbreviation VC. The translation into German also indicates already that VC is an investment form in which there is a certain risk for the investor. An example may be that the injected capital is not going to increase or even completely lost.

Venture capital is not a loan, but is rather seen as a form of development assistance for a business idea. A so-called venture capitalist funded a young company in the knowledge that the company may fail and he loses his invested money. Therefore select venture capitalists their investments accordingly wisely.

 Venture capital and the risks
The objective of venture capital is of course to maximize the money invested, which is regarded as a rule of thumb that a VC of ten deals made three very successful needed to achieve a good profit margin. Ie venture capital runs the risk of losing his investment, but also the chance to get a multiple of its investment when sold back.
Most are made not only financial resources available in venture capital deals, but often, unlike banks and credit institutions, logistical and moral support on the part of the investor. Just why are venture capital investors a very important partner for young, viable companies.

The investment of venture capital can be introduced in various stages of business development. It speaks of the so-called Stages. The first and most daring step is the seed funding that take place when the startup is still in the Seed Stage and VC Seed Stage Capital invests.
This is followed by the early-stage financing, in which the introduced venture capital is mostly used for the activities to the accomplished product development. Subsequent later-stage financing is often referred to as Growth Finance or expansion.
The final stage is the exit, in which the shares in a company are either sold back to the founders or other, financially strong investor wants to enter into the company.

Progress in venture business

The most effective and common in the past two decades abroad form of activities aimed at the intensification of use of inventions and other innovations in the market economic system and is of practical interest to the Russian experts, is a venture activity (high-risk). Its essence is in a temporary association of capitals of several legal and (or) physical persons and the establishment of a contractual basis for a small but highly mobile and efficient enterprises on the final design to the commercial condition of individual inventions. After finishing these inventions enterprise or absorbed by larger companies (often from among recent companions venture activities) or through the sale of licenses strengthen its financial position and on the basis of inventions deploying an active business to build its own production and commercial operations of the organization. Obvious examples of the latter option modification venture is a famous American company "Texas Instruments", "Xerox", "Teledyne". Quite often the initiators of the creation of venture capital companies are the inventors themselves. However, they are financed, usually quite large firms among the most interested in these inventions, such as "General Electric", "Boeing", "General Motors" and others. Such protection is due to the fact that these firms orient their activities for the modernization of their output products with a minimum of risk. Although each of them has its own powerful experimental basis, however, they prefer to watch the venture castings inventions which involve a considerable risk, from the side. Upon receipt of positive results of large companies get the most benefits. Modern ventures are flexible organizational structures, characterized by extremely high business activity, which is determined by the direct interest of inventors and their companions venture business in the early commercialization aspect of the invention, and with a minimum of their detention. The pace of development of inventions with them can not compete neither large nor especially medium and small industrial firms, which are also for the most part have a very small experimental productions. It is not surprising that much of the most fundamental inventions, for example, in metallurgy and automobile industry in the US, according to US experts, was developed by the industry giants are not (in particular, in the walls of "UNITED States Steel", "General Motors" and the like firms), and venture capital firms.

Western investors - founders of risky companies - deciding on the implementation of some - any ideas, pick up "command" from among well-known managers, lawyers, academics, professionals - practitioners and allocate funds necessary for the operation of the company during the first two - three years. Subsequently investors role is limited mainly covered evaluation period and subsidizing the following steps, if there are intermediate results. Particular attention is paid to the implementation of pre-agreed business - plan and completion deadlines is a condition for obtaining additional funds. Characteristically, these companies without access to traditional sources of financing, receive funds from the venture capital funds, deposits of private companies and investment of pension funds, whose contribution to the total risk investments up to 40%. Investors planning to make a profit through the sale of shares acquired after the success of the company when its shares will be quoted on the stock exchange. If risk company managed to create the first new products to go with her to the market and to increase the capital to become a public company, the former investors sell shares immediately and leave the business to engage, as a rule, a new business venture.Venture capital can be described as a source of long-term investments, provided usually for five years, companies in the early stages of its development, existing enterprises for their expansion and modernization, as well as for the financing of certain enterprises belonging to large corporations or private companies. To increase your chances of getting the required funds, developers and entrepreneurs have to learn to understand the philosophy and goals of venture capitalists, as well as the process of venture capital. The purpose of venture capital firms - to ensure long-term growth in the value of their capital through the provision of loans to young, growing companies or equity participation.Since money is usually available for a long term (5 years or more), it is important that between the entrepreneur and the venture capitalist to establish mutual trust and understanding. There should be no surprises venture capitalist. He should talk about everything and about the bad and the good, otherwise the company can not normally grow and develop over the years. The entrepreneur must be able to discuss with venture capitalists all their problems and plans for the future. When selecting investment projects venture capitalist employs three main criteria.

First of all, the company must have strong leadership. Persons in the management of the company must have solid experience and good preparation, they must be committed, be good specialists in their field, be able to cope with the challenges and to be flexible enough to go on, if necessary, changing the original plans. Venture capitalists are more willing to invest in first-class and second-class management team project, rather than vice versa. About how members of the management team believes in the success of the business and are committed to it, it will be judged on how they invest their own money in the company. And the important thing here is not even the amount and how this amount is related to investment opportunities employer.The second criteria are the uniqueness of the proposed project, its competitive advantages and market potential. The unique market niche - a mandatory requirement, as the new product or service will have to survive in a competitive environment, and the volume of their sales to grow over the five-year period for which money is issued. The novelty of the ideas necessary to prove conclusively in the business plan. Finally, the last criterion - high return on invested capital. Minimum profitability, which should be characterized by the project to be taken depends on the amount claimed, from the stage of formation of the company, but usually a venture capitalist interested only if the return on capital promises to be no less than 40 - 60%.In the Saratov region there are opportunities for the prosperity of a business venture - a large number of inventors and inventions, scientific and high-tech industrial base, developed infrastructure to support innovation.

Business communication

An important feature of business communication is regimentation. It is necessary to comply with ethical norms that are generally accepted rules of the system in accordance with national and cultural traditions. On how correctly apply ethical standards in business communication, much depends on the success of negotiations, and hence incomes of business.

The ethics of business communication allows you to build your own course of action in complex business relationships. Universal norms of etiquette culture enable not only the right to place the necessary emphasis, but also to analyze the behavior of the other participants in the process, as well as to model a given scenario. After all, in the sphere of business relations it is very important not to be involved in the conflict and did not cause negative emotions from others.
According to the famous American writer Emily Post, author of "Etiquette," high society consists not only of the rich alone, it is a circle of ladies and gentlemen, which can enter only literate, educated and kind person with an innate understanding of the feelings of other people and amenities. Therefore, the ethics of business communication is so important for each businessman.

 Rules of business etiquette

    Punctuality. At the talks should come in time. And equally unacceptable to come on an hour before the meeting, and late. This businessman knows how to appreciate your time and the time of its partners.
    Durability. Secrets of the company include a plurality of components. They include the course of doing business, personnel, technological issues. The ethics of business communication requires each employee to keep a secret organization.
    The need to consider the interests of partners. The main component of successful transactions is the ability to listen and understand the views of the opponent. Build your business, taking into account the characteristics of each participant in the process, respecting ethical standards, you can achieve high results much faster than acting punitive methods.
    Follow the dress code. Dress is best in accordance with the rules, do not go beyond the bounds of decency.
    Compliance with the rules of rhetoric and business writing. Use of slang words in a conversation, it generally illiterate, compiled with errors quotation able to nullify any dealings.
It turns out that most of the rules included in the etiquette of business communication, not much different from the rules of conduct of an intelligent person. Education, the style and manner of communication largely determine the position of the individual in society, give a certain status and social orientation.Errors in the behavior of Russian businessmen

    Aggression and defiance. Very common boast of their achievements, unreasonably large number of luxury goods. Throughout the world, this approach is considered bad form and suggests excessive pretentiousness and lack of respect for the interests of other partners.
    Lengthy arguments and talk about anything. Western partners carefully listen to all the statements interlocutor. Any finding or observation is stored and analyzed them thoroughly. Stories about the unlimited possibilities of alarming and cause distrust.
    Vague statements. "No problem" - an expression common among Russian businessmen. Its meaning is not clear to any Western counterparts. The business itself is made up of specific tasks to achieve the goal. Negotiations are conducted just to determine which issues agreement has been reached and where there were some problems.
    The intervention of third parties. Often, in the midst of negotiations or business meetings in the course of a person intervenes, whose participation was not provided. Most often, these people are the drivers, guards, colleagues, secretary and even his wife. So violated the basic rules of politeness. The importance and necessity of a transaction is reduced to zero. At this point it should be noted that the ethics of business communication involves the same rules for using mobile phones.

how motivate your workers?

The most effective incentive systems work relates the material motivation of the personnel. In our country, where careers are often brings only "headache" because of the increasing number of responsibilities and duties, and social base undeveloped, that financial incentives is the lever that best effect on improving employee productivity.Types of material incentives for staff
Financial motivation of personnel is based on a system of incentives for workers through financial rewards. There are several types of these incentives that affect the productivity of labor:

    raising salaries,
    additional payments and bonuses
    vacation pay,
    payment temporary loss of working capacity,
    contributions to the pension and social funds,
    of benefits.
Some types of material incentives prescribed in law, such as sick pay or paid holidays. But much depends on the employer, who owns the business. This is especially true of the system of salaries and bonuses, as well as of benefits that can be actually are not registered anywhere, and issued in good faith for the CEO job well done.How to motivate staff
Not always the material motivation of the personnel brings the expected results. This is a rather complex tool effects which should be used cautiously and with great skill. For example, during normal development or sales staff relies prize. Thus, after a while they perceive it as an integral part of the salary and motivational effect is lost. In order to avoid this, it is impossible to plan and set strict limits bonuses.

 This material motivation should be achievable and not be based on what always promised but not paid. This undermines faith in the principles themselves bonuses, which can lead to very serious consequences. According to experts, it is better to give up bonuses than not fulfill their promises.
Another feature of the bonuses, premiums and of benefits is that they are encouraged to pay as much as possible. Even if the amount is not too large, but it employs the effect of moral encouragement. The big break between the major benefit is not so well performing motivational function. In addition, in part of payments strengthened incentive for laggards workers, most importantly, to ensure that all were equal and surcharges actually meet the volume of work done.Carrot and stick in action
For financial motivation includes not only payments, but also fines. However, many employers are attracted to them and are used more often than encouraging, although the two types of material exposure must be in par. The predominance of penalties on the promotion results in increased turnover, as people are constantly exposed to fines, will never be qualitatively carry out their duties and will be looking for another job. As a result of losses from low productivity far exceed the amount of all fines.
Psychologists advise to approach this problem from the other side. Just for exceeding output quotas or other achievements set promotion. If the result is not achieved, additional payment is not made.
Another feature of the collection - its openness. Only then it will affect the working collective. In setting the fine, to prove what kind of material damage was caused to businesses and to receive an explanation of the employee.

how many businesses buy

Modern Russian business goes to the level where all the processes are intensifying and there is a need for its restructuring. This is due to consolidation of companies, as well as a change in the situation on global markets, which is necessary to correctly determine the value of the business as a basic criterion for its effectiveness.The criteria for business value
Particularly important is the valuation of the business for those entrepreneurs who want to buy or sell it. But with the development, when it is necessary to take a cheap loan, attention is drawn to the capitalization of the company, which can be a guarantee. In assessing the value of the business are taken into account such criteria as:

    organization,
    finance,
    technology
    material base,
    prospects.
It is based on these criteria, possible to build up a business plan, making an investment decision or restructuring.How to evaluate a business
At the initial stage of the business assessment is necessary to determine the value of company assets both tangible and intangible. Carefully evaluate real estate, warehouse supplies, equipment and machinery, as well as all financial assets like cash and kept in the securities and bank accounts.
The most difficult is to determine the effectiveness of the business. This is due to the necessity of a clear declaration of past and present income, as well as forecasting future profits of companies on the basis of administrative decisions made by management.
One of the effective methods is to compare with similar businesses. On the basis of the professional experts can with a high degree of accuracy to determine the value of the business.Methods of determining the value of the business
To assess the value of the business, there are many methods, but the most effective include these:

 expensive,
    revenue,
    comparative.
Expensive technique basically is the estimated amount of all assets of the business at their net book value. Thus, this approach evaluates the motivations and opinions of buyers who will not overpay for the company, and give as much as are his assets.
The income approach is based on the analysis and calculation of income that is expected to receive from the companies in the future. Based on this methodology is based on the prediction of future revenue enterprises.
The comparative method is used when there are expert confirmed the analogy that can be broadcast on the estimated business. This method can be very effective, but in the domestic market and the information on the assessment value of the companies, as a rule, is confidential.
But in assessing the value of traded companies, too, can not be objective because their owners tend to overestimate price. But with proper and careful analysis you can go to the right numbers to assess the business.Some nuances
In order to more objectively determine the value of the business, it is best to use all three approaches. It is a complex multifaceted analysis will most accurately determine the amount for which you can buy or sell the company.
After determining the initial value of a must in order to understand the purpose for which the business is realized. When an urgent need to sell the company, which began bankruptcy proceedings, then its value is automatically falls. If an entrepreneur wants to purchase shares of a company that has growth prospects, its value increased accordingly.

Venture business - what is it?

Venture business (or venture financing) is a form of direct investment into small and medium-sized enterprises which primary activity is carrying out developmental researches and development of the new knowledge-intensive ideas applicable in practice. That is, otherwise, it is the firms or the companies which are engaged in implementation of risky business projects.

Purposes, types, forms and objects of venture financing

The purpose of venture financing is receiving profit by the investor as a result of investment of capital in perspective, but risky projects and business.

By types of investment distinguish internal and external venture business.

Development of the first look is carried out at the expense of resources of offtakers of idea. Financing of an external venture comes in the way of attraction of financial resources from various sources: investment, insurance, charity, pension funds, resources of the state, private investors.

Risky investments can be carried out in several forms:

    in exchange for transfer into the ownership to the investor of part of stocks of the enterprise;
    in the form of a medium-term loan, with repayment periods from 3 to 7 years;
    in the form of a combination of two above-named forms of investment.

Objects of investment are some types of the enterprises:

    firms-start-up (the approximate translation "the beginning of a way") – absolutely new companies which are only formed and have no experience in the conditions of the market;
    firms beginners – those enterprises which arose independently, already have ready practices, but have no means for further development;
    firms ex-pan-sulfurs (from the word expansion – expansion) are the companies which already completely mastered the market niche and are ready to expand the influence on others, but on development of "new territories" they have no money;
    business ideas – simply risky project without any material resources which for receiving real profit demands financing from it.

Technique of venture financing

As a rule, the venture investor makes the investments in rather small enterprises in size. These companies usually are joint-stock companies, whose shares aren't traded at stock exchanges and are in property at small number of their owners.

You shouldn't identify venture financing with bank crediting or to perceive it as one of forms of strategic partnership. This a bit different concept.

    Unlike the bank credit organizations, the reckless investor doesn't demand material security (pledge by property) for the means provided to the enterprise.
    And unlike strategic partnership, the company or the individual providing venture investments can't make any powerful impact on acceptance by the management of object of investment of capital of certain decisions or correct its course of development.

The financing company is the passive observer who bears only risks of financial character rather. All completeness of responsibility for destiny of venture business lies on his owners.

The even competent and carefully counted investment of capital can't guarantee receiving positive result. Effective venture investments are considered if the market value of the pro-sponsored company within 5 years increases several times.

Despite all risks connected with such method of investment, venture business becomes more and more popular form of business management as allows, on the one hand, businessmen to receive money for the development, and on the other hand, to get to the reckless investor solid profit.