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Venture Capital

A venture capital firm is usually a private partnership that are funded by wealthy individuals and organisations. Larger investment banks, pension funds, and even university endowments also invest in VC firms. In some cases, companies themselves provide capital to VC firms.

Because venture capitalists have a lot of money at their disposal and are looking for ways to make it grow, they are naturally drawn to startup businesses — especially those with the potential to grow exponentially.

Venture capitalists invest in all types of businesses; however, startups in the biotechnology, software, computer hardware, and medical industries receive the most attention from venture investors.

Venture capitalists play an important role in taking small businesses from their infancy stage forward. They offer business owners two things that are crucial to any startup organisation: money and expertise. They also provide some protection for business owners by lending their name and reputation as a stamp of approval as well as helping them reach out to customers and other resources.

VCs don't just hand out money willy-nilly. A company must meet certain criteria before it can start attracting venture capital money. For example, the startup must demonstrate that it has a viable product or service.

Other Terms

Investment Memo

An investment memo (also known as a deal memo or deal memorandum)is a crisp and clear way to layout and pitch your company to potential investors. Memos are a clear and concise document to lay out strategic vision, rationale, and expectations for an investment, project, product or strategy.

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Venture Capital

A venture capital firm is usually a private partnership that are funded by wealthy individuals and organisations. Larger investment banks, pension funds, and even university endowments also invest in VC firms. In some cases, companies themselves provide capital to VC firms.

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Angel Investor

An angel investor is considered to be high-net-worth individuals who invests their own money (i.e., funds from their personal savings or from capital that they have earned from the sale of other business interests) in startups and small, growing firms.

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Investment Allocation

The investment allocation is the portion of the total round that is set aside for a specific investor. This is usually communicated in dollars but can be expressed as a percentage of the total round. For example, 100,000 or 14% of the round.

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Startup Accelerator

A startup accelerator program provides startups with financial investment, education, mentorship and networking that can help transform their early-stage companies into a successful business venture.

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Accredited Investor

An accredited investor is a person or group with enough wealth to be able to make certain types of investment.

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Venture Partner

A person, usually loosely associated with a venture capital firm, who helps the firm source new deals, find new limited partners, evaluate incoming startups, or help startups in the portfolio.

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Scout

In startups and venture capital, a scout is a person who helps investors source new deals.

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