ABSTRACT
Entrepreneurs with ventures that have the potential for high growth can face major challenges in financing the operating and capital needs that these businesses face throughout their development. Venture capitalists operate in an environment where investment proposals are based more on assumptions than historical facts because the high-growth firms are not traditional, mature enterprises. Venture capitalists are only really interested in projects that have an extremely large potential payoff. As was stated at the start of this chapter, raising funds is one of the most difficult activities that an entrepreneur must perform. Venture capitalists are active players in the financing of new firms, demand a substantial amount of information and control from the firm. The end point of the investment for some of these investors is an Initial Public Offering (IPO), which can be a very involved and expensive process but one which allows the initial founders to diversify their holdings.
