Venture capital

Mason, C. (2020) Venture capital. In: Kobayashi, A. (ed.) International Encyclopedia of Human Geography (Second Edition). Elsevier, pp. 155-160. (doi:10.1016/B978-0-08-102295-5.10153-2)

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Abstract

Venture capital is a specialist form of professionally managed finance designed to meet the financing needs of emergent firms, particularly in technology sectors, which are pursuing significant growth opportunities and which offer the prospects of high return. The finance is provided on a medium- to long-term basis in exchange for an equity stake. Investors share in the upside, obtaining their return in the form of a capital gain on the value of the shares at a “liquidity event,” but lose their investment if the business fails. Venture capital investors therefore restrict their investments to businesses which have the potential to achieve rapid growth. Very few companies meet these demanding investment criteria. Access to venture capital gives firms advantages that translate into innovation, fast growth, and job creation; hence, they make a disproportionate impact on economic development; however, venture capital investment activity is highly concentrated both globally and within countries in just a few cities and regions around—thus, it plays a significant role in contributing to uneven regional economic development.

Item Type:Book Sections
Status:Published
Glasgow Author(s) Enlighten ID:Mason, Professor Colin
Authors: Mason, C.
College/School:College of Social Sciences > Adam Smith Business School > Management
Publisher:Elsevier
Published Online:04 December 2019

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