Venture Capital - Meaning and Examples: www.deekpay.com

Venture capital usually involves experienced investors providing financial support to start-ups or small businesses to grow their business. As the company grows, the venture capital funding increases because the VC firm holds a portion of the company's shares. In return, the VC firm benefits from the company's growth. Venture capital funding is also known as venture capital or patient venture capital because the venture capital firm must be patient and wait for returns.

Although venture capital funds can be raised at any stage of a company's existence, venture capital funds are usually raised in the early stages of a company. Since venture capital funds are raised in the early stages of a company and in larger amounts, venture capital firms are fully supportive of the success of the business. Raising venture capital funds means that the fund manager will be on your side.

Characteristics of venture capital

Since venture capital funds are long-term investments, long-term capital appreciation is sought. The likelihood of obtaining venture capital funding is higher if the company is innovative. Venture capital funding can be in the form of equity, debt, loans, etc. At the same time, venture capital firms are expected to provide the right advice, counselling, expertise, and assistance in negotiations, etc.

Starting and managing a business is tough, and most entrepreneurs understand that. Venture capital firms can provide the necessary guidance and push to help your company move forward when business is difficult. They offer their knowledge and expertise to help you overcome difficulties in business.

Funding stage

The venture capital funding phase is broadly divided into two parts:

Early stage financing - This includes angel, seed and Series A rounds. This is usually to help build the business and optimise processes. After proof of concept, you can expect early stage financing from venture capital funds.

Expansion Financing - This financing stage is for well-run companies where the business can be financed for expansion. This is usually in the later stages of the company and is used to expand the business or to prepare for an exit.

Advantages of Venture Capital

The advantages of venture capital funds go beyond the funds raised themselves. The knowledge, expertise and resources of venture capital funds are even more important. When a venture capital fund invests in a business, its financial interests are closely tied to the company, and the venture capital fund will bring its team of experts to help the company succeed.

Venture capital foundations link businesses to similar or complementary businesses. They will ensure that the business acquires the necessary technical expertise, financial expertise and other valuable insights to succeed commercially. In short, the success of the business will be financially beneficial to all parties involved.

Examples of venture capital

There are many examples of venture capital funds in the Indian market. Venture capital funds like Tiger Global, KKR, Accel Partners, Temasek, Lightrock India invest in startups in India. Every year, many startups receive money from VC funds.

Unicorns are startups valued at $1 billion or more. Recently, Shiprocket became the 20th company this year and 106th overall to become a unicorn. The company, a logistics startup, received $32 million in investment from Temasek, Lightrock India and others. The company has been valued at $1.3 billion. Other unicorns this year include MamaEarth, Fractal, Leadbox, Dealshare and others.

Venture Capital firms have invested in many Indian startups such as Zomato, Swiggy, Oyo, Physics Wallah, Byju's and many more. Venture Capital Funds provide companies with the expertise to expand their business and work to help them get ready for an IPO for a profitable exit.