n AfricaGrowth Agenda - A venture capital agenda for Kenya

Volume 2009, Issue 10
  • ISSN : 1811-5187


Venture capital firms are professional, institutional managers of risk capital that enables and supports the most innovative and promising companies. This money funds new ideas that could not be financed with traditional bank financing, that threaten established products and services in a corporation, and that typically require five to eight years to be launched. Josh Lerner and Paul Gompers, authorities in this field, define venture capital as "Independently managed, dedicated pools of capital that focus on equity or equity-linked investments in privately held, high-growth companies". Venture capital is thus defined by three elements : it focuses is on privately held, high growth companies; it invests mostly via equity or equity linked investments such as convertible debt or warrants, as opposed to debt; and is independently managed by dedicated specialist teams as opposed to more generalist teams within banks which would finance different sectors or stages of companies.

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