Venture Capital (VC) is a form of private equity investment where investors provide funding to early-stage or start-up companies with high growth potential in exchange for equity (ownership stake) in the company.
This funding is typically used to support a business’s growth, product development, and market expansion.
Key Characteristics of Venture Capital:
- High Risk, High Reward: Venture capital is considered high risk because it typically involves investing in companies that are in their early stages and may not yet be profitable. However, successful ventures can offer substantial returns.
- Equity Investment: Investors receive ownership shares in the business rather than lending money. This means they benefit from the company’s success but also share the risk if the business fails.
- Stages of Investment: Venture capital is typically divided into stages, such as seed funding, early-stage funding, and growth-stage funding.
- Active Involvement: Many VC firms not only provide capital but also offer strategic guidance, industry connections, and management support to help the company grow.
Common in:
- Tech startups, biotech, and other industries with innovative products or services.
