Understanding Venture Capital

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Venture capital is the process forces the entrepreneur to hire a management team. The venture capital firms have significant representation on the board of directors and play a major role in shaping the company's growth strategy.

The process also forces entrepreneurs to prepare a business plan to describe their objectives and to specify their financial projections. Venture capitalists bring in a broad amount of experience to the venture, thereby improving management's available resources. Ideally, the venture capital process should develop better entrepreneurs and better managers.