Venture funding (VF) is a form of private equity funding that is generally provided to start-ups and companies at the nascent stage. VF is often offered to firms that show significant growth potential and revenue creation, thus generating potential high returns.
Entities offering VF invest in a company until it attains a significant position and then exits the same. In an ideal scenario, investors infuse funding in a company for 2 years and earn returns on it for the next 5 years. Expected returns can be as high as 10x of the invested funding.
Financial venture funding can be offered by –
Venture Funding firms create Venture Funds – a pool of money collected from other investors, companies, or funds. These firms also invest from their own funds to show commitment to their clients.
VF can be categorized as per the stage in which it is being invested. Generally, it is of the following 6 types –
Some of the features of venture funding are –
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