Venture capital or VC funding is a type of financing that involves investing capital in startups or businesses with a minimal operating history but a high potential for growth in exchange for equity. It can be provided at different stages of their evolution, right from seed funding through Series F. A prime characteristic of venture capital financing is that the investment isn’t limited to just the capital but is extended to strategizing and mentoring for the young, often tech-focused startups. VC Funds typically come from institutional investors and high net worth individuals and are pooled together by specialized investment firms. This pooled capital is called a venture capital fund.
Venture capitalists are the ones who actively seek out investment opportunities for the firm as well as help raise capital for venture funds. Generally, venture capitalists, also known as investment capitalists, are more focused on the growth of an industry than of an individual entrepreneur.
Venture capitalists can be divided into three types: Domain experts, operators, and networkers. Domain experts are the ones who have years of experience in your domain and know the ins and outs of building a business in the said domain. Operators are the ones with a proven record of growing and scaling businesses in the industry. Networkers are the ones who have a wide network of allies and can help connect entrepreneurs with domain experts and operators.