A financial portfolio is the set of financial products held by a person or an institution, whether it is a company or a fund.
The portfolio may contain different types of asset classes including stocks, bonds, and cash held by an investor. The decision about the asset class in which to invest and the proportions of this investment depend on your risk and return objectives, as well as your time horizon.
The explosion of startups around the world has also brought Venture Capital into the spotlight of investors, the contribution of risk capital by the investor to finance the start-up or growth of a business in sectors with high potential development, with highly innovative products or services.
Venture Capitalists invest in promising startups with the aim of obtaining an economic return on their investment, which however may have another probability of risk. When the investment is successful, the economic return is very high enough to cover negative investments in other startups.
It becomes very important to manage the portfolio and act according to different approaches and strategies which can be:
1. Choose to focus only on startups operating in specific sectors with a high innovation content (Medtech, Robotics, Artificial Intelligence, etc.)
2. Invest according to the life phase of the startup: in this case they can be start-ups in the “Seed” phase (the business idea exists but it has yet to be transformed into a company), in the “Early Stage” phase ( the startup has already started its business, has just launched its product / service), in the “Scale-up” phase (the startup already has its own reference market, is structured and medium-sized and wants to launch into new markets) and in the “Sustained Growth” phase (the startup is solid and structured “
3. Invest based on the level of risk, obviously taking into account the potential gains. If you invest in a young startup, the risk is much higher but with very high potential returns, on the other hand if you invest in a mature startup the risk level is generally lower but with possibly lower returns.
Typically, the Venture Capitalist chooses start-ups on the basis of three factors: an already solid team with a high level of skills, a broad reference market and a product / service that already starts with a certain competitive advantage
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The BizPlace Team