What is an equity investment

Venture capital

Venture capital
See also: equity


Risk capital, also known as venture capital, is, for example, the start-up capital for start-ups and young companies, e.g. B. also young stock corporations that are listed on the Neuer Markt. Risk capital also includes funds that are used to strengthen the equity base of small and medium-sized companies so that they can expand and implement innovative, sometimes high-risk projects. The provision of venture capital is also associated with a high level of risk for capital providers / investors, hence the term risk capital.

Equity capital in the form of venture capital is often made available by special venture capital companies (equity investment companies) or by venture capital funds.

In the health industry:

Synonym for: venture capital or venture capital.

Risk capital is part of the private equity sector, i.e. the market for private equity capital, and is organized outside of the capital market regulated by stock exchanges.

Risk capital is largely invested in unlisted, newly founded and technology-oriented companies, so-called "startups" or growth companies. The investment is usually made through the provision of equity or equity-like financing instruments; as a rule, the investor becomes a minority shareholder. In some cases, the investor also actively intervenes in the management of the company; he offers management support in order to promote the company economically. Most investors withdraw from the company after a few years by selling their shares or by going public (exit) of the company they financed. The average possible returns are quite high, but the investor also bears the high risk of an equity investment in a young company.

So far, private equity companies have rarely appeared in the healthcare and hospital market. However, there are a number of examples of such activities in the European hospital market.

In socialist economics: (Venture Capital) participation in an innovative company with above-average profit expectations, but below-average security.

This corporate philosophy takes the position that innovations can only be realized if financial resources are released for new problem solutions. If young entrepreneurs are currently receiving little risk capital, they lack the decisive lever to stimulate growth and thus create new jobs. As most new jobs are created by companies. who employ fewer than 100 people, from their point of view the decisive factor in reducing unemployment is, among other things, the extent to which more jobs can be created through innovation than can be saved through productivity-saving measures (company closings).

venture capital

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