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Venture Capital

About Venture Capital

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What is Venture Capital (VC)?

Venture Capital is a financing tool for companies and an investment vehicle for wealthy individuals and institutional investors. Wealthy investors like to invest their capital in startups with a long-term growth perspective. This capital is called venture capital and the investors are called venture capitalists, in other words, it is a way for companies to receive money in the short term and for investors to grow wealth in the long term.
 
Venture Capitals tend to focus on emerging companies and such investments are risky as they are illiquid, but also have the potential to provide impressive returns if invested in the right venture.

A venture capital firm can finance a company by equity participation and capital gains, participating in debentures and also extending conditional loans to the firms.
 

Funding process for VCs

Venture Capital firms raise money from banks, corporations, funds. The firm or investor, if interested in the proposal by the company who has submitted the business offer, then performs due diligence, which includes a thorough investigation of the company's business model, products, management, and operating history, among other things.
 
VCs have the power to influence the decision-making in the company, monitoring its progress before releasing additional funds and guide the business to profitable growth. The investors then exit the company after a period of 4-6 years after the initial investment by means of a merger, acquisition or an initial public offering or IPO.

Advantages of VCs

1. They bring wealth and expertise to a startup as bankers are skeptical to lend money in the early stages due to lack of assets that can be hedged as collateral. This also helps VCs to take control of the firm and have a say in the company's growth.
 
2. Large sums of equity finance can be provided as startups do not stand the obligation to repay money which helps in accelerating their growth.
 
3. VC firms are better equipped to evaluate early-stage startups, using methods that go beyond financial statements — such as product, market-size estimates, and the startup’s founding team. Further, the equities are uncapped and so there is no upper limit to how much an investor can earn.
 

Watch Video: What are the various types of start-up investors?

Latest Updates on Venture Capital

At $6.50 bn, tech accounted for largest share, followed by consumer discretionary and financial sector

Updated On: 22 Dec 2024 | 11:11 PM IST

Buyout investments emerged as the leading deal type in November at US$ 1.6 billion, followed by start-up investments at US$ 1.1 billion

Updated On: 18 Dec 2024 | 7:37 PM IST

The venture capital firm has invested in 30 startups in 2024 through its maiden $75 million fund

Updated On: 04 Dec 2024 | 9:46 PM IST

Antler's next Residency cohort in India is scheduled to commence in February 2025

Updated On: 04 Dec 2024 | 11:43 AM IST

Experts feel that the sector will continue to attract $5-6 bn private capital annually

Updated On: 01 Dec 2024 | 10:33 PM IST

Country continues to rank among top five markets globally for VC funding activity: Report

Updated On: 29 Nov 2024 | 11:27 PM IST

Accel's Prakash says India will become precision manufacturing powerhouse for aerospace and defence in next few years

Updated On: 25 Nov 2024 | 11:27 PM IST

'There is significant funding available today for business models which can demonstrate unit economics within a reasonable timeframe'

Updated On: 22 Nov 2024 | 2:08 PM IST

Startup IPO boom reshapes their investment strategies

Updated On: 19 Nov 2024 | 10:51 PM IST

The investment positions QubeHealth for its upcoming Series A round, targeting $9 million at a valuation of Rs 270 crore

Updated On: 05 Nov 2024 | 2:04 PM IST

Venture capital firms in India are becoming cautious with AI investments, emphasising solid business models and tangible returns, as many startups face closures amid changing dynamics

Updated On: 01 Nov 2024 | 12:12 PM IST

Venture capital firms also are directing as much as $79.2 billion in funding to AI startups by the end of the year, 27 per cent above 2023 levels

Updated On: 28 Oct 2024 | 12:50 PM IST

A total of 883 deals were announced between January and September 2024, marking a 7.3 per cent rise in deal volume compared to the same period in 2023

Updated On: 25 Oct 2024 | 3:15 PM IST

Company uses AI to recommend personalised fitness and nutrition plans

Updated On: 26 Oct 2024 | 12:05 AM IST

Industry welcomes move to expand the space economy to $44 billion by 2033

Updated On: 25 Oct 2024 | 4:03 PM IST

The move is expected to accelerate the growth of the private space sector in India, driving advancements in space technology

Updated On: 24 Oct 2024 | 4:05 PM IST

The industry, however, seems to be at a crossroads, with many funds' lifespans being extended and distributions at all-time lows

Updated On: 21 Oct 2024 | 10:57 PM IST

The decline in overall investments happened despite the number of deals being 26 per cent higher during the same period at 283 transactions

Updated On: 18 Oct 2024 | 10:33 PM IST

The fintech startup's evolution from a card-issuing platform to a broader banking-as-a-service (BaaS) provider helped drive the returns

Updated On: 18 Oct 2024 | 12:18 PM IST

Jivi, based out of the northern Indian city of Gurugram, uses AI to suggest potential diagnoses and treatments, generate health reports and perform administrative tasks, the fund said

Updated On: 08 Oct 2024 | 7:27 AM IST