Changing Trends

Since the downturn in 2000, venture capitalists have been unwilling to take overt risks and are investing more like merchant bankers. None of the guides will tell you this, but VCs are typically looking for the business whose pre-tax profit in three years equals the amount they put in. The investee must be able to sustain a growth rate of 30 percent for the first few years and the total funds invested should not exceed four times the expected annual profit or four years to return of investment. The business must also come across as being very low risk.

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