The returns expected by the venture capitalists are very high due to the higher risk element in their projects.In order to match the risk with the returns the venture capitalists make their investments very carefully and only after extensive due diligence.Different venture capitalists have different style of working. They can be different in terms of industry, stages of investment, involvement in the functioning of the companies etc.
Expectations of Venture capitalists:
Businesses to tap fast growing and untapped markets
Venture capitalists generally look for companies with quality products or services targeted at large, fast growing or untapped markets with a defensible strategic position such as intellectual property or patents.
Huge amount is at stake so the venture capitalists make it sure that the top management is well qualified and equipped to take strategic decisions. Sometimes Venture Capitalists also are involved in operations in for providing value addition.
Stages of Investment
Venture Capitalists also decide on the stages of investment and its structure.They also decide to invest at a reasonable price
Finally, venture capitalists look for the clear exit opportunity for their investment such as public listing or a third party acquisition of the investee company.