“A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.”   – Suze Orman 

Every business needs additional capital to grow in the business sector. Many business loans are the source of business funds. They need to obtain a fund while planning on expanding or enterprise a business. Venture Capital and Project Financing talk about Funds, Investment, Equity, and Debt.

Project Financing is a way to raise capital for long-term industrial, infrastructure, and utility projects. Many companies use this method of financing to manage large projects with limited financial structures.

Project finance is a tool for economic investment. It looks for an Internal Rate of Return(IRR) for cash flow, a measure of capital use or productivity. It relies on documentation. SPV (Special Purpose Vehicle) acts as a legal entity between the lender and the parent company provided by the sponsor. The funds for the resulting project are only transferred directly to this SPV.

Benefits of project finance 

• Achieving economic rent
• Risk distribution
• Increase in debt capacity
• Reduce overall assets costs
• Obtaining economic scope. 

Limitations of financing the project 

• Complex and expensive to set up
• The complexity of the project financing contract due to structural needs negotiated by all the parties leads to higher transactions costs.

There are diverse sources for obtaining project financing in that the most vital source of financing the project is Venture Capital.

Venture Capital refers to a financial investment provided at the early stage. It is a high-risk enterprise aimed at achieving a high rate of return. It plays an active role in running the business. Advice, experience, and industry connections are as valuable as financial capital. Capital invested in an enterprise has high-profit potential and a high risk of loss.

Venture finance relates to the value of a business and the net income, generally expressed in terms of EBIT, EBITDA, or net operating profit margin. It relies on the strength of the manager, its background, experience, and relations with investors. The parties must be able to support each other and form a true partnership. It plays a vital role in materializing an enterprise idea or an industry. The Vital values of venture finance are, To promote the expertise, performance of economic activities, obtaining the desired skills and competencies, possibilities of rapid development expansion.

The benefits of Venture Capital are the tendency for the startup to raise venture capital by allowing it to access a large amount of investment. It helps founders to manage the risk. There is an additional personal asset to the growing business. Experienced leadership and advice are available, opportunities to collaborate with industry experts and other startups are available. The limitations are reduction ownership, time-consuming, high minimum qualifications, the overall cost of financing is expensive, and leverage in negotiations is rare for the startup.

There is a variety of investment vehicles and partnerships to drive forward to change. Venture capital is excellent for startups with high growth potential. However, Facebook, Twitter succeeded in venture capital and to exceptional experience in the business world or If you want to attain power at a high financial altitude. Without investment, entrepreneurs can’t do anything. Keep your trust where it belongs and earn more than your investment.