1 How Do Venture Capital Companies Work?
What is VC? Where do VC firms get the money to Invest?
A venture capitalist (VC) is a private equity investor that provides funds or capital to startups and companies exhibiting high growth potential in exchange for an equity stake. It could be funding startup ventures or supporting small companies wishing to expand but doesn’t have access to equities markets. Venture capitalists are willing to risk investing in companies as they earn a massive return on investments (ROI) if these companies are a success. The VCs experience high rates of failure because of the uncertainty involved in unproven and new companies.
Usually, the Venture Capitalists are formed as limited partnerships (LP) wherein the partners invest in the VC fund. Usually, the fund has a committee that is tasked with making investment decisions. Once the
