Venture capital is one of the most widely used and popular methods of capturing funding in the startup ecosystem.
Venture capital funding is provided by venture funds, which are invested in by high net worth individuals, corporate entities, giant super funds, and other groups. These venture funds, which are managed by investors, invest in promising startups in return for equity stakes.
VC funds are, in most cases, interested only in startups that present high growth potential. Return on investment (RoI) isn’t the only factor that venture capital funds consider when investing in a startup, however. VC firms often specialize in specific industries or verticals, preferring to invest in startups that operate within their area of expertise. It’s also common for VC firms to work closely with startup founders, joining the board of startups they invest in.