Venture capital and growth capital: Choosing equities

In this blog, Scott Tominaga examines two types of capital: venture and growth. He also sheds light on both to help future investors craft their plans for the new decade. However, before anything else, it’s important to note that the investment strategy has to be planned out carefully and the asset class (venture or growth) has to be chosen wisely.Venture capital or VC pertains to equity investments that are made to fund young companies. This strategy utilizes funding mostly for initiating startups as well as the expansion of small and medium-sized businesses. Tech startups are perfect examples of companies that earn the interest of VC investors. As long as there are new products and ideas, VC investors will always be willing to consider them.

As opposed to VC, growth capital (also known as growth equity) is a strategy wherein funding is given to more mature companies. There are a number of goals for this, such as expansion of capital, operations restructuring, and funding of newly acquired companies. While the goal of VC is to help new companies get off the ground, the aim of growth capital is to help companies transform.Scott Tominaga explains that there are telling factors that investors should base their choices on, such as the state of the market, the performance of a company, and the potential for bankruptcy, among others. Having said that, Scott Tominaga also mentions that investors may opt to choose both strategies as long as they can afford it.

Scott Tominaga is PartnersAdmin LLC’s Chief Operating Officer. He has almost two decades of experience in the hedge fund and financial services industry. Visit this website for more on Scott and his work.