Venture Capital
Financing of startup and early stage businesses through high-risk, high reward deals in return for large equity stakes in the organization. Venture Capital (VC) firms serve as the intermediary between institutional investors – such as pension funds, university endowments, and high net worth individuals – and startup or early stage businesses. VC firms invest the third-party investor’s capital into businesses with high growth potential, such as biotechnology, energy, software or IT companies that need capital to develop technology or markets. In return, they retain a high degree of control over the company’s managerial decisions and a significant ownership stake in the company.
VC firms tend to be highly selective and companies often vie for venture funding in a highly competitive environment, through rigorous rounds of meetings and reports.
The end goal for the VC firm is to generate a return through the realization of an exit event, such as an IPO or sale of the company.