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Investment capital is extremely important to the development and funding of small companies around the world. When funding through other sources is expensive and impossible to get, investment capital can help innovative and creative companies flourish. It may also be used for other purposes: helping development and company recession.

Let us now try to define what investment capital is. Briefly stated, investment capital is used by investors in order to finance the operations of a small business through the purchase of shares that are not listed.

Therefore, investment capital can be used to fund small or medium sized companies in their first stages, it may enable them to grow faster, or help them survive when they are in trouble.

For that reason, there are four forms of investment capital: Risk or Venture capital, Growth Capital, Distressed investments, and Capital Transmission or Leveraged buyouts.

How does it really work? How does investment capital help small companies? We can say that investment capital gives financing that contributes to growth and development of businesses. The expertise of capital investors helps business increase their strategic thinking process. Additionally, when a company has more working capital it can afford to increase its added value, customer care and relations with suppliers and employees.

Can investment capital make the investor into a decision maker?

When an investor buys its participation into the company there is a high chance that he or she will intervene in the operations of the company. Venture capital is used in order to finance innovative and creative new businesses. Growth capital comes later in the development process of the company and their contribution may be different. Leveraged buyouts allow the company to use funds for acquisitions, and transfers. Distressed investments help companies that are facing tough times and may risk closure.

We can say a lot about how investment capital contributes to the life of a business. Venture capital helps start up businesses fund their operations without resorting to financial institutions. Capital investors also provide their strategic expertise to help the businesses improve their growth and performance. This strategic development helps businesses plan better for their short and long term futures.

Investment capital facilitates the growth both internal and external of a company by avoiding the use of expensive funds from other financial sources.