Venture capital is the fund that is raised through capital market by particular agents. This Venture Capital is one of the major sources of funding for the new business companies. Venture capitalists purchase bonds and shares issued by a new company; they are not interested in getting immediate dividends from the company in which they have invested. They want the companies to enlarge their scale which will in turn enhance the value of their invested capital. So, the Venture Capitalists are normally interested in promoting new companies with high growth prospect.
Capital Market is now becoming more global and the competition among the institutions are rising in this era of “institutionalized” markets, a larger share of credit now flows through the channels of capital market. Financing through capital market involves a much easier procedure compared to financing through banks. Deregulation, growing competition, advanced technology and fluctuating interest rates has resulted in increased effectiveness of capital markets. Capital Markets now has to propose more flexible ranges of financial instruments for borrowing and raising funds which help the borrowers and investors to manage risks associated with lending and investment, in a better manner.
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