A venture capital fund is an investment fund made up of contributions from wealthy individuals or companies, who give their money to a VC firm to mange their investment portfolio for them and to invest in high-risk start-ups in exchange for equity.
Often, the greatest obstacle between a great idea and a profitable business is cash. Venture capital can be a viable financing resource for either a start-up or a going business. Venture Capital (VC) firms make calculated investments in companies that they believe have the potential to make them money.
The primary advantage of venture capital financing is an ability for company expansion that would not be possible through bank funding or other methods. This is essential for start-ups with limited operating histories and high upfront costs.
Losing complete control over your company is difficult, but this is part of raising venture capital. It also isn’t easy to get funding. Besides maintaining growth, you will need to pass a due diligence process and have someone from the venture capital firm sit on your board of directors to oversee your actions.
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