You’ve heard of venture capital, but you might not be sure what it is or how it works. Venture capital is a type of investment strategy that funds startups, small companies and even large corporations in an effort to grow them into a successful business. This can involve funding for research and development, expansion of operations and other costs associated with growing a business. If you’re thinking about starting your own venture capital business, keep reading for more information!
Background
Venture capital is a form of private equity investing, which means it’s an investment made in exchange for equity. The mechanics of venture capital funds differ from those of other types of private equity funds because they’re typically structured as limited partnerships with multiple investors who provide capital at different times (and therefore receive different returns).
Portfolio Management
Portfolio management is the process of making investment decisions on behalf of a fund. Portfolio managers are responsible for investing the money in the best way possible, managing the fund’s assets and liabilities, monitoring performance and communicating with investors.
The portfolio manager must ensure that all investments are properly diversified so that no one company can affect too much of his or her portfolio’s total value, according to John Mattera. A variety of strategies can be used to accomplish this goal; for example:
• Diversification across industries or regions (e.g., investing in both technology companies and healthcare companies) can help reduce risk if one sector suffers while others thrive
• Diversification across different types of assets within an industry or region (e.g., investing both debt-backed securities as well as equity-backed securities) will enable you to benefit from growth while also enjoying some protection against downturns
Asset Activation
Asset activation is the process of turning an investment into a revenue-producing asset. The goal of asset activation is to maximize the value of your portfolio company By John Mattera increasing its revenue and/or reducing costs, while also ensuring that you have control over your own destiny. This can be done through a number of different methods, including go-to market strategies, cost cutting measures and restructuring efforts.