This section introduces the rationale of VC financing and builda the theoretical basis for the following considerations. First, the necessity of VC funding for start-ups will be outlinsed by contrasting an emerging company’s need for capital with its limited access to traditional funding. Then, this chapter addresses the questions of how VC fills the financing gap of start-ups and what motives the different participants pursue with their engagement in VC. The VCF’s expectations towards venture investments are discussed in particular. This chapter concludes in distinguishing different types of VC investors.


Cash Flow Fund Investor Capital Asset Price Model Investment Risk Equity Investor 
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© Deutscher Universitäts-Verlag/GWV Fachverlage GmbH, Wiesbaden 2006

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