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Venture Capital Definition
This capital is provided by investment banks, individual investors, or firms specifically dedicated to venture capital investments.
The value provided by venture capitalists often extends beyond monetary form, including technical or managerial expertise, as well as their network and other resources.
What is Venture Capital?
Venture capital has become a popular source of initial funding for companies looking to raise capital without the credit, operating history, or collateral to garner a traditional loan from a bank.
Because these projects are a high-risk, high-reward undertaking, venture capitalists often take a significant stake of the company, often along with a leading role in the activity and operations of the business.
The TV show “Shark Tank” is a popular example of venture capital investing.
Stages of Venture Capital Funding
There are multiple stages of venture capital funding.
The stage of funding is directly correlated to the progression and maturity of a venture—from just an idea to nearly ready for an IPO.
While amounts and rounds of funding change over time and by industry, here is a helpful list of rounds along with a typical amount raised.
- Pre-Seed Stage/Friends and Family Round: Usually <$50k
- Angel Investors: Usually 25k-100k
- Seed Stage: Often $500k – $2 MM
- Round 1/Series A: Often $2-15 MM
- Round 2/Series B: Often $10-30 MM
- Round 3/Series C: Often $20-50 MM
- Mezzanine/Pre-IPO (Varies)