The amount of money available from wealthy individuals varies. Indirect risk capital may be available if the wealthy individual agrees to guarantee the business's obligations. Most specialize in one or a few closely related industries. They have formal, established investment evaluation criteria and emphasize capital appreciation through rapid growth. Venture capitalist have traditionally preferred proven growth businesses with significant potential for liquidity in three to five years.
Liquidity plays a significant role in determining the structure of an individual investment deal.
To reduce risks and to influence business decisions, venture capitalists may stage financing, meeting needs only up to critical decision points. Venture capitalists will demand a high degree of control to protect their investments. Pricing a venture-capital transaction requires determination of a percentage of current or future rights to equity ownership by an earnings capitalization calculation. The result is based on performance projections of the business and investment markets. The projections and related business plan will serve as the basis for negotiation.