Joint Venture - JV

Loading the player...

What is a 'Joint Venture - JV'

A joint venture (JV) is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it. However, the venture is its own entity, separate and apart from the participants' other business interests.

BREAKING DOWN 'Joint Venture - JV'

Although JVs represent a great way to pool capital and expertise and reduce the exposure of risk to all involved, they do present some unique challenges as well. For instance, if party A comes up with an idea that allows the JV to flourish, what cut of the profits does party A get? Does the party simply receive a cut based on the original investment pool or is there recognition of the party's contribution above and beyond the initial stake? For this and other reasons, it is estimated that nearly half of all JVs last less than four years and end in animosity.

RELATED TERMS
  1. Joint Bond

    A bond that is guaranteed by a party other than the issuer. A ...
  2. Strategic Joint Venture

    A business agreement between two different companies to work ...
  3. Venture Capital

    Money provided by investors to startup firms and small businesses ...
  4. Joint

    A legal term describing a transaction or agreement where two ...
  5. Venture Capitalist

    An investor who either provides capital to startup ventures or ...
  6. Joint And Several Liability

    When multiple parties can be held liable for the same event or ...
Related Articles
  1. Investing

    What does Joint Venture Mean?

    In a typical joint venture, two or more businesses agree to contribute capital and resources for a common project. Most often, that project produces something that earns revenue.
  2. Managing Wealth

    Does Your Startup Need Venture Capital Money?

    Venture capital funding provides capital to grow a business. However, entrepreneurs will also lose some control over business decisions.
  3. Managing Wealth

    Seek An Adventure In Venture Capital

    Make a career out of chasing down the "next big thing".
  4. Markets

    Virtual Joint Venture: A New Model For US Businesses to Enter China?

    Learn about virtual joint ventures and how these agreements may promote the entrance of American companies into China's vast markets.
  5. Managing Wealth

    How Social Venture Capital Is Changing the World

    Learn what social venture capital is and the ways in which it differs from traditional venture capital. Identify two leading social venture capital firms.
  6. Managing Wealth

    A Look Into The Secrets Of Venture Capitalism

    Venture capitalists own an equity stake in the start-up and have a say in the functioning of the company. Investments are generally made in early stages of a company with long term high growth ...
  7. Personal Finance

    Swimming Pools: Costs Vs. Long-Term Value

    Consider the costs of installing and maintaining a swimming pool, and compare this with the pool's utility and the market value it adds to your home.
  8. Managing Wealth

    A How-To Guide to Being a Venture Capitalist

    So, you want to be a venture capitalist? Here's what it takes (besides capital).
  9. Managing Wealth

    A Day in the Life of a Venture Capitalist

    Learn more about the job description of a venture capitalist and discover what a typical day in the life of this professional might look like.
  10. Managing Wealth

    Fed Raising Rates Affects Startup Funding

    With interest rates having nowhere else to go but up, the Fed’s impending interest rate raise will likely begin to reverse the flow of startup funding.
RELATED FAQS
  1. What are the primary disadvantages of forming a joint venture?

    Learn the disadvantages to forming and maintaining a joint venture partnership, including factors business owners should ... Read Answer >>
  2. What are the primary advantages of forming a joint venture?

    Learn how the advantages of entering into a joint venture make the business strategy an alternative to mergers and acquisitions ... Read Answer >>
  3. Do joint ventures need an exit strategy?

    Understand why an exit strategy is important for a business partnership such as a joint venture, and learn the options partners ... Read Answer >>
  4. What is the difference between the equity method and the proportional consolidation ...

    Discover the differences between the equity method and the proportional consolidation method of joint venture accounting, ... Read Answer >>
  5. How are joint ventures regulated in the United States?

    Learn how joint ventures are governed in the United States, and discover why tort law is so important for upholding the contracts ... Read Answer >>
  6. What's the difference between general, limited and joined venture partnerships?

    Read about some of the important differences between general partnerships, limited partnerships and joint venture arrangements ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center