{"id":95,"date":"2009-01-10T21:26:25","date_gmt":"2009-01-11T01:26:25","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/sammy\/?p=95"},"modified":"2009-06-24T21:32:44","modified_gmt":"2009-06-25T01:32:44","slug":"article-summary-how-venture-capital-works-by-zider-bob","status":"publish","type":"post","link":"https:\/\/archive.blogs.harvard.edu\/sammy\/2009\/01\/10\/article-summary-how-venture-capital-works-by-zider-bob\/","title":{"rendered":"Article Summary: &#8220;How Venture Capital Works&#8221; by Zider, Bob"},"content":{"rendered":"<p><strong>This is a summary I have written for Zider\u2019s article \u201cHow Venture Capital Works\u201d, originally as part of my Harvard Innovation and Business Transformation class assignment.<\/strong><\/p>\n<p>Venture capitalists buy a stake in an entrepreneur&#8217;s idea, invest in the balance sheet and infrastructure until the business grows large enough to be sold to a corporation or the public through IPO. More than 80% of venture capital money goes to the commercialization of an innovation, the money is invested in the infrastructure: expense investments (manufacturing, sales) and balance sheets (fixed assets, working capital). VCs prefer to invest in good managers and good industries that are in the adolescent phrase: fast growing with its capacity constrained in 5 years. Downside protection and favorable reinvestment options are commonly required by VCs. VCs adopts a portfolio approach, they expect 10 times return of capital over 5 years, and prefer entrepreneurs to have prior business experience, the ability to sell oneself and outstanding skills.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This is a summary I have written for Zider\u2019s article \u201cHow Venture Capital Works\u201d, originally as part of my Harvard Innovation and Business Transformation class assignment. Venture capitalists buy a stake in an entrepreneur&#8217;s idea, invest in the balance sheet and infrastructure until the business grows large enough to be sold to a corporation or [&hellip;]<\/p>\n","protected":false},"author":1920,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6260,439],"tags":[749],"class_list":["post-95","post","type-post","status-publish","format-standard","hentry","category-book-reviews-summaries","category-harvard","tag-entrepreneurship"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/archive.blogs.harvard.edu\/sammy\/wp-json\/wp\/v2\/posts\/95","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive.blogs.harvard.edu\/sammy\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/archive.blogs.harvard.edu\/sammy\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/sammy\/wp-json\/wp\/v2\/users\/1920"}],"replies":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/sammy\/wp-json\/wp\/v2\/comments?post=95"}],"version-history":[{"count":3,"href":"https:\/\/archive.blogs.harvard.edu\/sammy\/wp-json\/wp\/v2\/posts\/95\/revisions"}],"predecessor-version":[{"id":97,"href":"https:\/\/archive.blogs.harvard.edu\/sammy\/wp-json\/wp\/v2\/posts\/95\/revisions\/97"}],"wp:attachment":[{"href":"https:\/\/archive.blogs.harvard.edu\/sammy\/wp-json\/wp\/v2\/media?parent=95"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/sammy\/wp-json\/wp\/v2\/categories?post=95"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/sammy\/wp-json\/wp\/v2\/tags?post=95"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}