Investment Capital Explained

Investment capital plays a major role in the economy. It represents a fundamental support for the unlisted companies throughout its existence. It contributes directly to business creation, promotion of innovation of new technologies, growth, employment and renewal of the economic fabric.

How can we define investment capital? In short, the main objective of Investment Capital is to take majority or minority stake in small and medium-sized companies usually not listed.

This investment capital finances the start-up, growth, transmission, sometimes the recovery and survival of small businesses.

There are different forms of investment capital: Risk or Venture capital, Growth Capital, Distressed investments, and Capital Transmission or Leveraged buyouts.

Let us now talk about what investment capital does? Investment Capital supports companies in various areas: First, it provides financing and capital necessary for its development. Second: It accompanies its management in strategic decisions. Third: It allows it to improve its potential for creating value for its customers, shareholders, partners, officers and employees.

When does Investment capital intervene in the operations of the company?

Investment capital may intervene in the different stages of development of a company. For one, venture capital contributes to the growth of a start up business. Growth capital, helps companies expand, purchase new assets and investment. Leveraged buyouts are geared toward the acquisition, transfer or the disposal of a business.

What is then the contribution of investment capital to life of a business? When a small company cannot get credit from a financial institution or may do so but paying high interests, investment capital becomes the most attractive option. However it can only be given to those that have promising futures. In that sense, a company will get expertise, strategic support, and improved performance.

Investment capital facilitates the growth both internal and external of a company by avoiding the use of expensive funds from other financial sources.