Venture fund intermediation and management
In this final sub-section, the Financial intermediation and Venture Fund Management paper describes a functional approach to understanding the roles of financial systems in economic growth. It next traces the development of the venture capital industry, and discusses the unique organization features of private equity and venture capital funds that are designed to achieve the functions in financial intermediation before concluding with the key determinants to value in venture capital funds.
The Venture Capital Financing provides an overview of the venture capital industry, explaining the rationale for financial intermediation as well as outlining the key factors in venture capital investment selection. It also outlines the typical capital structure and legal documentation associated with venture capital financings.
The ties between growth and the quality of the functions provided by the financial system are robust. This means venture capital needs to stick close to principles that underpin its quality and functional purpose in advancing innovation-based growth opportunities. A great deal hinges on the ability of venture capitalists to spot science and technology and identify entrepreneurs and teams to foster them into leading companies. These activities need to be conducted with discipline, supported by thorough analysis of specific opportunities within the context of an analytically rigorous framework, and with awareness of potential agency issues that might arise in the investment management process.