The Pros And Cons Of Investment

A common problem for the people of today is when is the right time to invest. There are two main stages in investing, early stage and late stage. Both of these have their pros and cons in terms of risk and reward. This reoccurring problem has been going of for tens of years ever since investing has become a major part of income. Even though investing in a company during their early stages can consequences, the reward is far greater than investing in the later stages of a company.
The first forms of investment trace back to the early 1600’s. It is far from similar to the ways of modern day of investing, but it set the premise for today’s investing. “Early investment institutions such as acceptance houses and merchant banks helped finance foreign trade and accumulated funds for long-term investments overseas” (Accuplan). This was very common for the people back then because people are always trying to find way to expand their business in life. According to Accuplan in 1792 the New York Stock Exchange started. Because it was so successful, it is home to the majority of the worlds largest and best-known companies. Some of the most successful businessmen such as J.P. Morgan were one of the first people in the United States to be a billionaire through the use of investing.
One form of investment is Venture Capital which is considered the early stage of investing. According to investopedia venture capital is a source of financing for new businesses. It funds pool investors cash and loan it to startup firms and small businesses with perceived, long term growth potential. This is very important for businesses to get them started in life and help them expand. In return for giving company money, they hope to receive their initial input of...

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... other companies from competing directly with it.” Venture capital firms are willing to invest in a company if they feel that the potential to grow is double or more in value as result of additional financial resources. Using this approach to accelerate growth, entrepreneurs can increase the value of their equity stake without significant incremental risk.
Last stage investing is becoming more and more popular with popular companies today. According to Sarah Lacy, “Today, the best companies of the last ten years have all raised late stage money, and the prices are no longer a bargain.” Some of the most know companies today such as Twitter, Groupon, and Zynga.
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Lacy states, “This chart shows dramatic comebacks. In the wake of the dot com crash, limited partners privately told me that Accel Partners was one of two major firms that would never raise a fund again.”