Venture capital

[alexj8100]

Please could I have some help understanding venture capitalism? If someone invests say �10,000 in a business for 10% shares/equity does that entitle them to 10% of the profits per annum? I appreciate that there might be allsorts of circumstance but is that the gist of it? Thanks in advance.

[Hammer]

Sort of. They would own 10% of the company so would get 10% of any funds paid back to shareholders. The company may decide to re-invest profits back into the business though, in which case they would own 10% of a bigger business but would not get paid as such.