• Closing: Once the terms are agreed upon, the investment is closed, and the venture capitalist becomes a shareholder in the business.

The Effect of Venture Capital on the Economy

Venture capital is important to the economy because:
• Driving Innovation: Venture money helps entrepreneurs create new technology and business strategies. This will have increased productivity and thus the growth of the economy, thereby yielding more employment opportunities.

The venture capital process

The venture capital process typically entails multiple steps:

• Entrepreneurs pitch their business ideas to venture investors, generally using a detailed business plan and a presentation.

• Due Diligence: For his interest in the company, a venture capitalist will do due diligence to determine the venture's potential. This may comprise checking financial statements, talking to customers and partners, and assessing the management team.

• Negotiation: When due diligence results are positive, then the venture capitalist and entrepreneur are to work out the terms of the investment. This covers money, valuation, and ownership stake.