Venture Capital

Venture capital is capital provided to startups with a high risk of failure and high potential for growth. This is why venture capital is sometimes referred to as “risk capital.” Venture capital is invested after a startup bootstraps and/or raises its seed investment funds. Venture capital is most often first invested in a startup in the startup’s Series A financing round. Venture capital firms seek returns for their investors through the sale or IPO of the startups in which they invest.

Venture capital is part of the private equity asset class, which includes venture capital, buyouts and mezzanine funding.

Venture capital investments can be linked to significant job creation in the United States and some of the best places to work, including Google, Facebook, Amazon, Intel and Microsoft. Most prominent technology companies were funded in part with venture capital.

According to the NVCA, approximately 40 percent of startups in which venture capital was invested fail (return no capital), approximately 40 percent of startups in which venture capital was invested earn small returns (up to perhaps 2X) and 20 percent of startups in which venture capital was invested create high returns.