Big Venture Capital Funding Sources
Corporate foundations operate similar to the academic enterprise foundations in that they are funding enterprises within an industry or niche. Some of these foundations are set up by the companies themselves, while others are organized by other institutions. Most of the corporations who fund enterprises within an industry (in the US at least) are Fortune 100 or larger companies with strong industries in which they participate.
Some corporate foundations have a strong development focus, while others have a “triage” focus. For example, a business-focused foundation might only fund companies that use technology that is related to the industries in which the company participates. They may also fund companies in particular areas of technology, such as cloud computing, rather than focusing on the technology itself. They also might be philanthropically oriented, and have some social responsibility as part of their portfolio.
Another advantage of corporate foundations is that they have access to a wider range of financing sources, including those that are not easily available to startups. For example, corporations have numerous lines of credit with financial institutions that are less likely to provide startup funding to a startup. Likewise, many financial institutions and lenders are limited in their ability to fund specific sectors, whereas corporate foundations have much broader lending power.
VCs are often described as venture capitalists, because they typically fund new ventures in the technology space, like a new casino or any venture with that big of a scalability factor. However, some venture capitalists are more likely to take a direct approach to investing in technology ventures. They also provide critical business development advice, especially when the venture is in an early stage of development.
Founding software developers may find that they can easily create a successful business because they possess a deep understanding of the process and are familiar with the current trends in the industry. Therefore, they have a very low risk tolerance when investing in technology. Moreover, VCs generally have access to a significant amount of capital, and are better able to invest in early-stage ventures, which often require significant capital. These factors make VCs an ideal partner for emerging technology businesses.
The advantages of VCs are that they generally have a very good understanding of the sector and economy, and they are able to spot emerging opportunities early, while they are relatively cheap to access. Many VCs take an early, direct approach, using small venture capital funds to fund early-stage technology ventures. As a result, they often have a good understanding of the needs of early-stage technology ventures.
Investment Banking Institutions
Most large, global banks and investment banks have large technology consulting teams and a sophisticated product development group. They also have extensive relationships with major software companies and key software developers. With this wide network, they are able to source or recommend high-quality technologies to their clients, who in turn make investments in early stage software businesses. This allows the banks to attract significant amounts of clients, who are interested in the new technology.
All of these business models can be used to fund new technology ventures. When used in a complementary manner, they provide the necessary funding sources for emerging technology companies, while also helping them to gain exposure to the venture capital market.