Finance for Innovation Essay Example | Topics and Well Written Essays - 2500 words

Finance for Innovation - Essay Example This paper illustrates that financial resources are critically essential in all innovation process aspects and all financial sources are significant. A good financial innovator is Kueski.com, a financial innovator located in Guadalajara in Mexico, which chose a banking platform in Mambu cloud to operate its magnificent and fast-growing lending business. Kueski.com is an innovator that offers online loans through a complicated risk algorithm drawing on several sources of data like a client’s social profile so as to assess his/her creditworthiness. Venture capital industry is regarded as a solution for financial innovation since it addresses most needs for technology startups. Venture capital typically funds innovations through rich investors, university endowment funds, pension funds as well as other institutional investors for a certain period of time. Venture capitalists actively invest and are involved in assisting strategy, operations, marketing, and personnel. Usually, the y restrict give restriction to entrepreneurs from getting funds from other potential investors without explicit permission from the venture capitalists. Venture capital involves specialized funds that are invested and managed in companies by people who best understand the industry that they are investing. The funds offered by venture capital and the equity share kept by managers are sensitive to the ability and experience of the capital providers and how mature the firm that is being funded is. Venture capital usually boosts the value of the funded firms especially if the investors are experienced. There are several stages that venture capital provides funds; Venture capitalists provide finance for research, assessing and developing the initial concept of a business before it reaches the startup stage. It finances businesses that require more funds after the development stage to initiate sales and commercial manufacturing.