What is a business development company?
Business development, also known as BDC, works on the development or incubation of small companies or businesses that are just starting. BDC is similar to the risk capital fund (VC), but while the VC Fund is privately held, a business company is publicly traded. In other words, business companies usually sell shares of shares on public indexes such as S&P, Amex and Nasdaq.
Business development companies must usually comply with the standards and regulations stipulated by the government of their country. For example, in the United States (USA), the Company must comply with the Regulations stipulated by the 1940 Investment Company Act. These rules state that such a company can only invest in private entities, unlike publicly traded enterprises. In addition, it must submit quarterly and annual reports with the US Securities and Stock Exchange Commission. Rules for specific regions and countries can usually be found via search for intErnet.
Some larger business companies coordinate investments to several private companies. Other companies have an internal department that provides VC funds. The financing of VC financing and financing of business development is used to incubate small enterprises and investments. The aim is to raise new businesses in productive companies and then reap a longer -term payout with a share of shares. Companies that work on the provision of these types of business incubators often wear several hats; Some may help in creating a business plan, setting budget, designing production plans or any other practical tasks. Other companies or funds can be set up to provide only capital or offer basic advice and certain key business services.
In order to qualify as a company for business development, the entity usually meetsAt least 90% of gross income taxable from the sale of securities or shares must be connected to standards for diversification of its shares and in the US. The company for developing business can also use something called mezzanin financing, which includes raising money for a company that is at work but is not yet open; This type of financing can also apply to business extensions in planning phases, but does not work yet. Some critics of corporations for business development compared them to Ponzi schemes. Defenders for the development of business claim that funds democratize the investment world by allowing individuals to share wealth generated by the incubation process.