In this day and age, social media influences how we connect, shop, and consume information. But behind every new growing business, lies the question of – how these business owners get the money to grow. Whether it is a clothing brand, a tech startup looking for investors, a small business running a crowdfunding campaign, or a major corporation selling shares to the public, raising money and capital is the first part of initial success. One common way businesses secure funding, whether it’s a local or global business, is through venture capital.
Venture capital will play a huge role in the future, where it is estimated that more than 80% of the money invested by venture capitalists will go into building the infrastructure required to grow the business in a different type of expenses whether it is marketing, manufacturing the goods, or sales. The idea of venture capital is that banks invest a company’s balance sheet and infrastructure until it reaches a sufficient size and credibility so that it can be sold to a corporation or so that the institutional public-equity markets can step in and provide liquidity. In essence, the venture capitalist buys a stake in an entrepreneur’s idea, nurtures it for a short period of time, and then exits with the help of an investment banker.
A good example of venture capital is in 2018, an 88 million dollar series of funding was made to raise for Roman Health Ventures, a company that added in men’s health. By 2021 the Roman Health ventures, were able to raise over $500 million dollars, expanding their goods and services. This manifested how much venture capital is able to help out the business to expand not only their goods and services but also their reach in the market, driving innovation, improving efficiency, and fostering overall growth.
A very renowned/well-known type of venture capital is crowdfunding. With social media rising everyday, companies are able to take advantage of that and use something called crowdfunding. Crowdfunding involves raising small amount of money from a large of individuals to finance a new business venture. Using the leverage of social media it allows for investors and entrepreneurs to easily connect. An example of this is The Hmorous Kickstarter project. The Hmorous Kickstarter project was a business that made projects that involved an individual seeking to create a new potato salad recipe with a modest goal of $10, but ended up raising over $55,000 from 6,911 backers. Investors can choose from numerous projects and invest as little as $10. Crowdfunding sites typically earn revenue by taking a percentage of the funds raised.