Selective financing
Venture capital and innovation

Venture capital is commonly defined as equity investment in young technology companies. Behind this summary definition lies a financing technique that is only applicable to a certain category of young, innovative companies at different stages of their initial development. These companies have no financial track record, few or no assets, are not yet generating sales, or at least no profit, and are therefore ineligible for conventional bank financing. Financing such companies, whose activities are by nature uncertain, can generate a financial return for the venture capitalist that is out of all proportion to the returns offered by other asset classes, such as bonds or even shares in mature companies. Only very fast-growing companies...