Venture Capital – Startup Financing
Introduction
Venture Capital (VC) is a subset of Private Equity, but focusing on early-stage Startups with high growth potential but high risk.
1. Who is a VC?
- Professional investors who manage funds to invest in startups.
- They know 9 out of 10 startups might fail, but one "Unicorn" (Billion dollar startup) will cover all losses.
2. Stages of Funding
Stage 1: Seed Capital
- Just an idea or prototype.
- Funded by: Angel Investors (Rich individuals), Friends & Family.
Stage 2: Early Stage (Series A)
- Product is ready. Need money for marketing/team.
- Funded by: Venture Capitalists (VCs).
Stage 3: Growth Stage (Series B, C...)
- Scaling up operations, entering new cities.
- Funded by: Large VCs, PE firms.
Stage 4: Exit (IPO)
- Listing on stock exchange (e.g., Zomato IPO, Paytm IPO).
3. VC vs Angel Investor
| Feature | Angel Investor | Venture Capitalist |
|---|---|---|
| Money source | Own personal money | Other people's money (Fund) |
| Amount | Small (Lakhs to few Crores) | Large (Millions of Dollars) |
| Stage | Very Early (Idea) | Early to Growth |
Summary
- Focus: Startups (High Risk).
- Unicorn: Startup valued over $1 Billion.
- Goal: 100x Returns.
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