What is Venture Capital

What is a venture capital? What do venture capitalists want from fledgling companies in exchange for investment? What does venture capitalist look for in a potential investment?

How does one successfully sell a business funding invitation to a venture capital firm? Find the answers to these questions in our basic guide.

A venture capital is funding provided by an investment firm to a fledgling company in various stages of development. It differs from the investment of an angel investor in that the vehicle making the investment is a legal business entity – partnerships or limited liability companies -- rather than an individual. This business entity is composed of individuals and institutions that pool their money for investment in early-stage companies that promises to generate high returns.

What Do Venture Capitalists Want in Exchange for Investment

A venture capital is so called because it is an investment that carries a high risk for the investor. It is provided to companies that typically are: in early stage of development, and those that are too young to obtain a bank loan or raise capital through a public offering. In exchange for cash, a venture capitalist gets shares in company where he puts his investment, giving him the right to participate in the management of that company. Because of the high risk associated in making the investment, venture capitalists demand higher returns than what is usually sought for by investors in established companies. The realization of this return is through a trade sale of the company or initial public offering. This is usually is at a pre-determined time. Afterwards, the venture capitalist can make follow-on investments.

What Does Venture Capitalist Look for in a Potential Investment?

Logically, venture capitalists wouldn’t just throw their money in just anybody looking for capital to fund some idea. They are looking for novel ideas that promise to generate high investment returns in the early stage of its commercialization. These investment opportunities are usually in software, biotechnology, medicine and healthcare. But venture capitalist would not only look at the product. They will also look at the dedication and expertise of the target company’s management, and the strength of its business plan.

How to Sell to a Venture Capital Firm?

Look for a venture capital firm whose interest is in line with the business you plan to pursue. Make a thorough research to know which venture capital firm will most likely take an interest in your proposal. Look at which industry and in what type of company (early stage or established one?) does it typically invests in. Visit The National Venture Capital Association for a list of venture capital firms. Going through this “matching” process could be tasking for someone who is doing it for the first time. That is why there are venture capital consultants that can assist companies in seeking venture capital firms to pitch a funding invitation unto. You can enlist the help of a consultant to save you time and effort when trying to find a venture capital firm to fund your business.


  • thulasi kumar ravilla said on September 7, 2009
    find me a venture capitalist for health business
  • Genevieve Allender said on October 9, 2011
    I live in Southern Colorado and am trying to raise money to buy a Bed and Breakfast in an area that will draw Timeshare owners this would be a profitable venture, I know this because I work for a Timeshare Exchange Company and hear the daily request for locations in this area, I am looking for any one who is willing to help with this endevor this will Gross in the millions if done properly
  • Tahirul islam said on November 21, 2012
    Sir, i want to start a business of producing disposable products .how much land and capital is needed
  • sourabh jain said on April 17, 2013
    sir i want to start vitrified tiles plant in my city so how much capital and land and resources i need to start on small scale ..
  • mayurshah said on June 5, 2013
    i want to open vectrified tiles manufacturing plant
  • Sumitha said on December 23, 2013
    I live in Mysore, Karnataka. We are into Architectural, Interior design Consultants, Deal with Agri related products.We are looking for funds for our business expansion plans. We are planning to construct Old Age Home, Resort includes Cottages,Landscape garden, Swimming Pool, Ayurveda Centre,Administrative Office, Party Ground and Parking zone to be added to our business as we have location advantages. Our personnel have experience in this industry for the past 15 years. As you are aware it is boom time for India’s Tourism and Hospitality Sector, driven by a surge in business Traveller arrivals and a soaring interest in India as a tourist destination with the Foreign visitor arrivals reaching a record, resulting in good amount of international tourism receipts. The resort what we are planning will be having good nos of cottages with a refreshing mix of style and spacious elegance. Our guest rooms and will be offering peace and tranquility as well as the comforts of modern day time.

    The funds what we are planning to raise will help us to meet our business targets, which are to increase sales and increase profits . With this Funds and in conjunction with this Funds, we will make a number of modifications or changes to our current business in order to reach our targets. We promise to generate high returns to our investors. Kindly contact us by mail giving complete details
  • v rajesh said on March 2, 2014
    How much capital you want to newly start the tiles manufacturing business
  • s.selvarani said on June 12, 2014
    transport business in tamilnadu
  • Daniel said on June 21, 2014
    I would like to start a developing new homes business, but as of now I am a handyman business after acquiring knowledge I would like how to apply for funds and a business plan
  • Janak Patel said on March 12, 2016
    If any body want to partnership with me by giving 3 crore rs then I ready to give 75% partnership in my land. This business give 60% profit. Currently I am working with Ashitech Equipment pvt ltd which is also made Drum mix plant & this company start in 2006 & today this company net profit is more than 4 crore. My contact no 9714215820


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