Venture capital firms need to make such high rates of return

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When we consider taking venture capital to finance our business, we discover that venture capital firms require very high rates of return on their investment. Rates between 40% and 50% percent are not uncommon. This often means an entrepreneur will have to give up a substantial portion of his or her business, and maybe even the majority of his or her business, to raise the required capital. Is it fair that venture capitalists charge such high rates given that the entrepreneur is the one who came up with the business idea? Why is it that venture capital firms need to make such high rates of return?

Reference no: EM131323872

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