The Different Types of

Venture Capital
There are various types of venture capital funding that cater to different
stages of business growth. Let's explore six categories to understand how
each stage works.
 Seed Capital
In this first stage of venture funding, the venture or the startup company in
need of the funds contacts the venture capital firm or the investor. The
venture firm shall share its business idea with the investors and convince
them to invest in the project. The investor or venture capital firm shall
then conduct research on the business idea and analyze its future
potential. If the expected returns in the future are good, the investor
(Venture capitalist) shall invest in the business.
 Startup Capital
Startup capital is the second stage of venture funding. If the venture is
able to attract an investor, the idea of the business of the venture is
brought into reality. Generally, a person from the venture capital firm
takes a seat in the management of the business to monitor the
operations regularly and keep a check that every activity is done as per
the framed plan.
 Early Stage
Capital
In this stage, the investor significantly increases the capital invested in
the venture business. Once a business has developed a product, it will
need additional capital to ramp up production and sales before it can
become self-funding. The business will then need one or more funding
rounds, typically denoted incrementally as Series A, Series B, etc .
 Expansion
Capital
In this stage, the company expands its business by way of diversification and
differentiation of its products. This is possible only if the company is earning good
profits and revenue. To reach up to this stage, the company needs to be operational
for at least 2 to 3 years. The expansion gives the venture new wings to enter into
untapped markets.
 Bridge
Financing
This is the last stage of venture funding. When the
company has developed a substantial share in the market
with its products, the company may opt for going public.
One main reason for going public is that the investors can
exit the company after earning profits for the risks they
have taken all the years. The company mainly uses the
amount received by way of IPO for various purposes like
mergers, elimination of competitors, research and
development, etc.