Venture Capital 

This is a long-term, minority and temporary investment in small- and medium-sized enterprises with high profitability and/or growth perspectives. This activity is carried out by companies specialized in capital investment that bring an added value beyond the purely financial standpoint.

Characteristics

Law 1/99, of January 5, regulates the activities of Venture Capital Companies and of venture capital management companies.

Investment in venture capital/investment represents an interesting alternative way to capitalize SMEs, as these can find funding difficult to obtain, especially when still in the early stages of growth.

This type of investment is carried out by specialized investment companies, as a certain risk is entailed.

Basically, there are two types of companies:

• Venture Capital Company: This is a company that fundamentally aims to invest its own resources in temporary and minority financing of innovative SMEs, providing an added value through management support. It does not usually have a limited duration and it can augment its resources through capital increases.
• Venture capital fund management company : A group of experts of renowned experience and prestige in venture capital investments, dedicated to promoting the creation and development of temporary Venture Capital Funds, in exchange for a fixed amount plus an interest in the capital gains made during divestment.

Currently, there are 51 companies in Spain with resources amounting to 2,073.49 million euro, out of which 23 are venture capital management companies.

Almost all of these 51 companies belong to the Spanish Venture Capital Association.

Investments can be made while the company to receive the money is in any one of the following stages:

• Seeding
• Start-up
• Expansion
• Substitution
• Leveraged buy-out ( LBO/ MBO/MBJ)
• Reorientation

Investors generally prefer expansion and leveraged buy-outs, each of which represents almost 40% out of the total invested. The lowest amount of investment activity, a mere 1%, can be detected during the seeding stage, due to the higher risk entailed.

More information

• Spanish Venture Capital Association - ASCRI

  St. Josefa Valcárcel number 8 Third A

  28027 Madrid

  Tel.: 0034 91 320 28 84

  Fax: 0034 91 320 84 38

• Axis, Participaciones Empresariales - AXIS

  St. Los Madrazo, number 38 2ª floor

  28014 Madrid

  Telf: 0034 91 523 16 37

  Fax: 0034 91 532 19 33

• Spanish Development Financing Company - COFIDES

  St. Príncipe de Vergara, number 132, floor 12

  28002 Madrid

  Telf: 0034 91 745 44 80 - 0034 91 562 60 08

  Fax: 0034 91 561 00 15

  e-mail: cofides@cofides.es

• List of Venture Capital Companies [es]