Jargons
Who is a Venture Capitalist?
Venture capitalists are wealthy investors or high net-worth individuals (HNI) who invest their capital in businesses with high growth potential. They often work together in firms, pooling money to fund startups.
Key takeaways
- Venture capitalists (VCs) are wealthy investors or high net-worth individuals (HNI) who invest in start-up companies with high growth potential.
- VCs often work together in venture capital firms, pooling their money to fund startups.
- There are different stages of VC investing, including seed-stage, early-stage, and later-stage capital.
- Seed-stage capital is provided to help develop an idea, early-stage capital is used for initial operations, and later-stage capital is for businesses with running operations and revenues before an IPO.
You may have heard how the companies which are listed on the stock market raise funds through IPO, FPO, Rights Issue, QIP, etc. But, most start-up companies are not listed on the market. How do they raise funds? Do the promoters or the founders of the company has to put their own money?
Here comes the entry of a Venture Capitalist (VC). Wealthy investors or high net-worth individuals (HNI) like to invest their capital in businesses which has a huge potential to grow in the future. This acts as a method for them to earn high returns by investing capital for the long term.
Venture capital firms
A venture capitalist can work on their own and invest in start-ups but it is more logical to work together as a group and then invest. In this way, many HNIs pool their money together and fund a startup. A team of analysts or researchers works for these wealthy investors and tells them how the startup might perform in the future. Thus, this back-end team helps them make proper decisions.
Stages of VC Investing
- Seed-stage Capital: The capital provided to help an entrepreneur or a start-up to develop an idea. This stage refers to the period just after which the company has been launched. The capital invested is generally used for research & development.
- Early-stage Capital: The VC funding at this stage is used to set up initial operations of the newly formed company.
- Later-stage Capital: The stage of business when the operations are running, revenues are started to record but the company is still left to launch its IPO.
VC Examples
Venture Capital
Startups Funded
Sequoia Capital
Truecaller, Zomato, Byju, Oyo Rooms, Micromax
Helion Venture Partners
Yepme, MakemyTrip, redBus, ShopClues
Accel Partners
Myntra, BookMyShow, Flipkart
Kalaari Capital
ScoopWhoop, Industrybuying.com, Cashkaro
Frequently asked questions
What is a Venture Capitalist?
A Venture Capitalist (VC) is a wealthy investor or high net-worth individual (HNI) who invests their capital in businesses with a huge potential to grow in the future.
How do venture capitalists typically invest?
Venture capitalists often work together as a group in venture capital firms, pooling their money to fund startups.
What are the stages of VC investing?
The stages of VC investing include seed-stage capital, early-stage capital, and later-stage capital.
Which companies have been funded by Sequoia Capital?
Sequoia Capital has funded startups such as Truecaller, Zomato, Byju, Oyo Rooms, and Micromax.
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