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What is harvesting?
Home » Accounting » Venture Capital » What is harvesting?The main goal of a Venture Capitalist, as stated previously, is to gain a sizeable return, profit and earnings from a business or company that most other individuals, firms or funding agencies (like banks) would deem as too risky. Therefore, the hope of a Venture Capitalist is often to sell their stocks or another form of equity derived from their investment or receive the highest amount of possible return during a specific amount of time, which is usually just as the Venture Capitalist intends to exit the investment. This kind of earning as you leave so as to avoid further risk is commonly referred to as harvesting.
Venture capitalists know as well as anyone that not all of the investments they have made will pay off for them as they hope. For example, the failure rate of Venture Capital Funds is staggeringly high, which is now considered to be anywhere from twenty to ninety percent failure rate in which zero capital was recovered by the investor.
Therefore, if a Venture Capitalist can succesfully harvest an investment, then all of the investments made by the Venture Capitalist are easily taken care of and written off or accounted for.
Related Venture Capital Articles
- What is Venture Capital?
- When is Venture Capital most often utilized?
- Who is most commonly involved in Venture Capital?
- Are there time limits regarding Venture Capital Investments?
- With all the risks, why do individuals do Venture Capital funds?
- What is harvesting?
- What is the most common way to minimize the overall risks of Venture Capital?