How does Venture Capital work?

1. High-risk Investing 📊

• VCs invest in early-stage startups that are too risky for traditional bank loans. Startups typically can’t acquire conventional funding.

2. Funding for Equity 🏢

• VCs buy equity in the company, instead of lending money. They own a share of the business and stand to profit if the company succeeds.

3. Early-stage focus 🔎

• Venture capital is deployed in various stages, from seed funding to subsequent growth stages. Each stage is designed to help the company reach the next milestone, whether it’s developing a product, or scaling operations.

• For example: Seed, Series A, Series B, etc.

4. Exit Strategy 📈

• VCs invest with the aim of exiting the startup with a significant return. Common exit strategies include M&A or Initial Public Offering (IPO).

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