Business Development Company (BDC)
What is a Business Development Company (BDC)?
Business development company (BDC) is a designation specific to public firms that invest in small, upcoming businesses. BDCs hope their stakes in the businesses loan to small enterprises and consulting for a fee.increase in value as the business grows. BDCs also
How Does a Business Development Company (BDC) Work?
What makes them unique is that investors can buy shares of BDCs on the open venture capital.and participate in the formerly difficult to access world of
When looking for prospective small business, a seats or simply providing consulting ).does not invest in just any company -- its goal is to invest in and provide to those that one day grow large. As such, a also looks for a business where it can exert significant control over the company's direction (which could include holding board
Most BDCs have regulated taxable income to shareholders every year. This RIC status also requires BDCs to stay diversified: they can't more than 5% of their assets in any single security, they can't buy more than 10% of any 's voting securities, and they can't more than a quarter of their assets into businesses that they control or businesses that are in the same industry. This does not apply to in U.S. government securities or other registered companies.company (RIC) status, which means they must distribute at least 90% of their
Why Does a Business Development Company (BDC) Matter?
BDCs are similar to private equity (PE) since they provide investors with a way to invest in small companies and participate in the sale of those . However, VC and PE funds are often closed to all but wealthy investors. BDCs, on the other hand, allow anyone who purchases a share to participate in this .(VC) or
BDCs also liquidity than VC and PE funds. Investors no longer have to wait for the investment managers to liquidate the 's in the underlying companies; they can simply sell their in the open . This feature often attracts to newly public BDCs, thereby giving them a faster way to raise capital for .more