CURRENT EVENT ARTICLE REVIEW ON ANYTHING FINANCE RELATED Essay

CURRENT EVENT ARTICLE REVIEW ON ANYTHING FINANCE RELATED - Essay Example The survey also found that consumer IT, health-care IT and business IT remaining as favorites for VCs to increase their investment dollars at the expense of clean technology, medical-device and biopharmaceutical companies. The paradox though is that both CEOs and VCs are optimistic about the increase in value of their investments (Basich, 2011). To adequately analyze this article it is first important to understand the role of Venture Capital for the startup businesses. Venture Capital is a finance that is provided to startups that are too small to raise the capital they need, either through bank loans or otherwise but that have a high potential for growth. The numerous benefits of VC is summarised by research conducted by Puri and Zarutskie (2010) as follows: VC-financed firms typically grow more quickly, tend to grow bigger and are less likely to fail in comparison to non-VC-financed firms. When we place this into the current American context it means that VC-financing would be critical for rapid job creation due to their typical quicker growth rate and given that most employees are employed by small businesses such as these rising startups. The higher potential for massive growth also portends well for the US economy as it predicts higher wages associated with large companies that will translate to higher disposable in comes and thus increased consumer spending. Finally, the decreased likelihood of failure of VC-financed firms is vital for increasing investor confidence in the US market in general and entrepreneurship in particular. The article’s prediction of decreased venture investing in 2012 therefore robs the US of the hope of quick recovery from its slow economy. Venture investing is often accompanied by other support services such as increased management capacity, industry networking and so on which are equally critical in supporting the growth of startups.