Venture Capital and Flora

One of my dreams is to have a “green room”; a room just full of plants. Some on the floor, others hanging from the ceiling, and a huge glass window that lets sunlight in.?

Plants and trees start as seeds. These seeds grow and form roots, stems, flowers, and some even fruits. To grow, they need:

• Water
• Sunlight
• Fertilizer
• Care

These are the necessary ingredients for flora to grow. Also, as you add positive things, you must take away negative things, like weeds, locusts, and other things that would harm your flora.?

These seeds can grow into big and powerful trees, providing fruits, shade, and sometimes wood for a fire.?

The seeds can grow into plants that can be transplanted, taking them from one place to another. The plant can bear edible fruits as well; think vegetables (did you know that a tomato is both a fruit and a vegetable?)

Planting seeds, or caring for plants already grown and have the potential to grow bigger, is the rationale behind Venture Capital.?

A quick Wikipedia search would tell you:?

“Venture capital is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth.”

The VC firm is the gardener. The money and expertise that they and other investors (the Limited Partners) provide are the ingredients.

VC firms help start-ups by providing seed capital because they see potential in these start-ups. Money, despite being an important factor, is not the sole nutrient needed for a company to grow. VC firms need to provide expertise to make sure their seeds flourish into a beautiful garden/forest. Working together with the entrepreneurs to perfect strategy, operations, expansions, etc is what makes the investment a success.?

The companies that VC firms invest in are called Portfolio Companies. How do investors in VC firms get a return? Through:

• IPOs. This is where the companies go public and the money received from the IPO is used to pay back investors.
• Strategic Sale. This is where the VC sells the company to another established company and distributes the funds to investors.

The IPO is similar to growing a tree and selling it to a public park so everyone has access to it (for a fee).?

The strategic sale is similar to transplanting and giving (selling) it to another gardener.?

The gardener (VC firm (also called General partner or GP)) gets paid by eating some of the fruits from the garden (management fees).?

VC is important when it comes to entrepreneurship as it can develop the economy of countries. By helping businesses start up and flourish, they help with employment, tax to the government, and add to the GDP of the economy.