What Is Venture Capital (VC)?

 Venture capital (VC) is a form of private equity and a type of

financing that investors provide to startup companies and small
businesses that are believed to have long-term growth potential.

 Venture capital generally comes from well-off investors,

investment banks, and any other financial institutions. Venture
capital doesn't always have to be money.

 In fact, it often comes as technical or managerial expertise. VC

is typically allocated to small companies with exceptional growth
potential or to those that grow quickly and appear poised to
continue to expand.
Example :
Is Shark Tank an example of venture capital?
The Sharks are venture capitalists, meaning that they provide capital
(money) to companies with the potential for growth in exchange for
equity stake.
 Venture Capital – Pros And Cons

Pros;
 Provides early-stage companies with capital to bootstrap operations

 Companies don't need cash flow or assets to secure VC funding

 VC-backed mentoring and networking services help new companies

secure talent and growth
Cons;

 Demand a large share of company equity

 Companies may find themselves losing creative control as

investors demand immediate returns

 VCs may pressure companies to exit investments rather than

pursue long-term growth
The stages of VC investment are:

 Pre-Seed

 Seed Funding

 Early-Stage Funding

 Later-stage capital
Pre-seed/accelerator-stage capital
 Pre-seed-stage is capital provided to an entrepreneur to help them develop an idea.

 Many entrepreneurs interested in raising venture capital funding will enter business
incubators (accelerators), which provide various services and resources for
entrepreneurs to connect them with venture firms and networks that will help them
develop their business idea and product.
Seed-stage capital
 Seed-stage capital is the capital
provided to help an entrepreneur
(or prospective entrepreneur)
develop their idea into an early-
stage product.

 Seed stage capital usually funds

the research and development
(R&D) of new products and
services and research into
prospective markets.
Early-stage capital
 Early-stage capital is
venture capital provided
to set up initial
operation and basic
production.

 Early-stage capital
supports product
development,
marketing, commercial
manufacturing, and
sales.
Later-stage capital
 Later-stage capital is the venture capital
provided after the business generates
revenues but before an initial public
offering (IPO).

 It includes capital needed for initial

expansion (second-stage capital), capital
needed for major expansions, product
improvement, major marketing campaigns,
mergers & acquisitions (third-stage
capital), and capital needed to go public
(mezzanine or bridge capital).
Thank you…

Presented by,
Aman Chakradhari