Venture Capital is funding that comes in usually after the first couple of round of Angel Investment Capital. The companies tend to have established themselves and have a model proven to show that the company can make money, but still needs money to scale business operations.
When you take on venture capital, you are often subject to terms that go beyond the monetary investment to include giving up a seat at your board.
Venture Capital firms may come in as a lead investor (the primary institutional investor) but demand that other firms join in on the investment. This gives the venture capital firm comfort knowing that other funds will be vetting the opportunity along-side of them and could potentially save them from making a bad investment.
Venture Capital may sometimes come from a single person who has a high net worth and make a practice of investing in risk opportunities. This person is different from angel investors in that he / she will usually have a team of people working to find the investments for them and then to make the final recommendations.
Venture Capital firms put together significant funds from multiple investors including individuals and institutions such as banks, insurance companies and other organizations that have strong balance sheets.
Each Venture Capital fund has different mandates that it is looking to achieve. They all have the primary purpose to make money, but some will have jobs , technologies or even geographical targets for their fund.
Before taking too much time to pursue a fund, you should first find out if your business fits into the venture capital fund you are approaching. This could save you considerable time and allow you to stay focused on funds that are potential investors.
