Venture capital (VC) is a form of financing that typically enters the scene after a startup has completed its initial rounds of angel investment. By this stage, the company has demonstrated a viable business model and is generating revenue—but needs significant capital to scale operations and accelerate growth.
What Do Venture Capitalists Look For?
When VC firms invest, they’re not just providing money. They often require influence—commonly in the form of board seats, voting rights, or veto power over key decisions. This gives them oversight and a voice in shaping the company’s future.
A lead VC may spearhead a funding round but will typically insist on other firms participating. This “syndication” reduces risk by ensuring multiple parties vet the opportunity, adding credibility to the investment.
Who Provides Venture Capital?
Venture capital can come from firms or individuals:
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VC Firms: These manage large funds pooled from high-net-worth individuals, banks, insurance companies, and institutional investors. Their mandate is to deliver strong returns—though some funds may also target specific sectors, technologies, job creation, or regions.
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High-Net-Worth Individuals (HNWIs): While sometimes mistaken for angel investors, HNWIs in the VC space often work through teams or family offices. These professionals scout deals, conduct due diligence, and recommend investments—bringing a level of rigor beyond what typical angel investors provide.
Should You Pursue Venture Capital?
Before approaching a VC fund, do your homework. Not all funds are a match for your business stage, sector, or geography. Studying a fund’s mandate can help you avoid wasted time and focus only on firms aligned with your mission and potential.
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