The full form of VC is Venture capitalists. A form of private equity investment known as venture capital is made available by venture capital firms to start-ups, early-stage, and developing companies that exhibit considerable growth potential. A VC looks for equity or a share in the company in exchange for their investment in the startup. They assume the risk of investing in risky start-ups in the hopes that some of the businesses will flourish. However, due to the significant level of uncertainty around a start-up’s success, VC investments frequently fail.
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The company receives cash from a venture capitalist following a round called the seed-funding round. These financing organizations look for possibilities to profit by purchasing the equity shares of an existing business or start-up, and once they have achieved the required level of profit, they abandon the plan. the same as going public with an IPO, selling the shares to another finance business, or engaging in some sort of merger. Profiting from new, emerging companies is a venture capitalist’s primary goal.
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Types of VCs
The primary criteria used to categorise venture capitalists are their methods, resources, and investment strategies.
The three primary categories of VCs are Angel Investors, Financial VCs, and Strategic VCs. However, they also vary depending on the nature of the business (investing in established firms or those that are being disrupted). Some invest exclusively in certain industries, some invest locally while others do so globally, and some may sell the equity they have acquired quickly while others may wait for a larger return or a longer period of time.
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