Money provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns.
Investopedia explains 'Venture Capital'
Venture capital can also include managerial and technical expertise. Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships. This form of raising capital is popular among new companies or ventures with limited operating history, which cannot raise funds by issuing debt. The downside for entrepreneurs is that venture capitalists usually get a say in company decisions, in addition to a portion of the equity.
Definition of 'Financial Innovation'
Advances over time in the financial instruments and payment systems used in the lending and borrowing of funds. These changes, which include innovations in technology, risk transfer and credit and equity generation, have increased available credit for borrowers and given banks new and less costly ways to raise equity capital.
Investopedia explains 'Financial Innovation'
As seen with the global credit crunch sparked in 2008, which was triggered at least in part by innovative financial products such as exotic ARMs, there will always be a need for careful scrutiny of innovative financial products and their risks.
financial innovation
Definition
The creation of new technological advances in the financial products market. The implementation of an online banking system that allows a user to instantly transfer money from multiple accounts is considered an instance of financial innovation.
GDP deflator
Definition
Gross Domestic Product deflator. A measure of the change in prices of goods newly produced within a country over