Venture Capital

Venture Capital Basics

What It Is: Institutional venture capital comes from professionally managed funds that have $25 million to more than $1 billion to invest in emerging growth companies. Venture capital focuses on capital investments in private, young, fast-growing companies.

Appropriate for: High-growth, high-potential companies that are capable of becoming market leaders, and being profitable in five to eight years.

Best Use: Varied. From financing product development and commercializing promising technologies to building durable well-run businesses.

Cost: Expensive. Institutional venture capitalists purchase significant equity in a business. The earlier the investment stage, the more equity is required to persuade an institutional venture capitalist to invest. The range of funds typically available is $500,000 to more than $30 million.

Ease of Acquisition: Difficult. Institutional venture capitalists are choosy. Institutional venture capital is an appropriate source of funding for only a limited number of companies.

Source: National Venture Capital Association

Today's Most Read

News and Articles About Venture Capital

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Why VCs Often Turn Away Promising Investments

If you are rejected, don't automatically assume it's your business plan that's the issue. It could be the firm's approach to its fund's investment cycle.
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Launching Today: Silicon Valley Venture Fund for Big Data Startups

Data Elite wants to fill a need for big data startups that aren't satisfied by generic startup incubators and investment funds. And it has major backers ready to make sure it succeeds.
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Billionaire Reid Hoffman Reveals LinkedIn's 2004 Pitch Deck Along With Invaluable Startup Advice

The LinkedIn co-founder and VC shares valuable insight on what entrepreneurs need to know when pitching their startups to investors.
Alyson Shontell
The Worst Business Plan Mistake Entrepreneurs Make
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The Worst Business Plan Mistake Entrepreneurs Make

If you think you can just hire someone else to do the dirty work of writing your business plan, think again.
Tim Berry
How Blind Smartphone Users Helped This Startup Test the Waters
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How Blind Smartphone Users Helped This Startup Test the Waters

The co-founder of Fleksy explains how focusing on a niche demographic prepared him for the mass market.
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Uber and Flipboard Help VC Deal Activity Hit $7.2 Billion Last Quarter

While the mobile industry had a record-breaking quarter for VC funding, health care was a flop.
Andrea Huspeni
Venture Capital Trends by State, Industry (Infographic)
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Venture Capital Trends by State, Industry (Infographic)

Venture capitalists invest approximately $20 billion a year into U.S. companies. Where does the money go? This infographic has the answers.
Kate Taylor
Your Secret Decoder Ring for VC Speak
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Your Secret Decoder Ring for VC Speak

Venture capitalist Sharon Wienbar gives us the skinny on what kind of questions VCs ask and why they ask them.
Sharon Wienbar
Why Equity Crowdfunding Isn't a Threat to Venture Capital
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Why Equity Crowdfunding Isn't a Threat to Venture Capital

Under the JOBS Act, there will be new ways to raise money. But not all fund-raising is created equal.
Scott Shane
Twitter's IPO Will Make All These People Millionaires and Billionaires
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Twitter's IPO Will Make All These People Millionaires and Billionaires

With the IPO set, Twitter's venture capital investors, longtime employees and other stockholders are about to become very wealthy.
Steve Case's New $200 Million VC Fund Will Invest 'Off the Beaten Path'
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Steve Case's New $200 Million VC Fund Will Invest 'Off the Beaten Path'

Billionaire Steve Case shares his plans for Revolution Ventures, which will focus on tech companies outside the proving ground of Silicon Valley.
Brian Patrick Eha
Fundraising 101: Words of Advice From One Founder to Another
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Fundraising 101: Words of Advice From One Founder to Another

For our series The Grind, the founder of Travefy offers up advice on securing external capital.
David Donner Chait
Why Equity Crowdfunding Is a Terrible Idea
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Why Equity Crowdfunding Is a Terrible Idea

Equity crowdfunding proposes a fair shot for all entrepreneurs, but as with most things in a capitalist structure, only the strong will survive.
Jeff Wald
Ditch the Business Plan, Get Online and Other Tips for Dealing With Investors
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Ditch the Business Plan, Get Online and Other Tips for Dealing With Investors

Venture capitalist John Frankel offers up advice on how to meet and pitch investors.
John Frankel