Venture Capital
Summary
Understanding the people who provide funding for rapid growth.Key Concepts
- Venture capitalists operate funds by raising money from private investors.
- They identify and buy equity cheaply in businesses with huge growth potential, stick with the company over a number of years and then make an exit.
- Expectations of a return on investment of more than ten times are normal.
- The economics of a VC fund only work out if they operate at a certain scale and if they make deals typically of $1 million to $2 million and above.
- A selling point for any venture capital fund is its claim to be able to access proprietary deal flow (i.e. to get first option to invest in potentially lucrative opportunities before anyone else).
