f you have a upcoming company but lack the power of funds, who do you look for? A venture capitalist, of course. However, Venture Capitalists provide more than funds for your company. The usual mechanism for venture investment is through the formation of a new company. The company will own rights to the intellectual property (patents etc.) that stem from earlier research activities and will probably employ or have consultancy contracts with the scientists behind the research work. The venture capital firm buys a shareholding in the new company, thereby providing the company with money for development work. Frequently, more than one venture capital firm may invest in a company, even at an early stage in its development.
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