You may have heard how the companies which are listed on the stock market raise funds through IPO, FPO, Rights Issue, QIP etc. But, most of the start-up companies are not listed on the market. How do they raise funds? Do the promoters or the founders of the company has to put their own money? 

Here comes the entry of a Venture Capitalist (VC). Wealthy investors or high net-worth individuals (HNI) like to invest their capital in businesses which has a huge potential to grow in future. This acts as a method for them to earn high returns by investing capital for the long-term.

Venture capital firms

A venture capitalist can work on their own and invest in start-ups but it is more logical to work together as a group and then invest. With this way, many HNI pool their money together and funds a startup. A team of analysts or researchers works for these wealthy investors and tell them how the startup might perform in the future. Thus, this back-end team helps them make proper decisions.

Stages of VC Investing

  1. Seed-stage Capital: The capital provided to help an entrepreneur or a start-up to develop an idea. This stage refers to the period just after which the company has been launched. The capital invested is generally used for research & development.
  2. Early-stage Capital: The VC funding at this stage is used to set-up initial operations of the newly formed company.
  3. Later-stage Capital: The stage of business when the operations are running, revenues are started to record but the company is still left to launch its IPO.

VC Examples

Venture CapitalStartups Funded
Sequoia Capital Truecaller, Zomato, Byju, Oyo Rooms, Micromax
Helion Venture PartnersYepme, MakemyTrip, redBus, ShopClues
Accel PartnersMyntra, BookMyShow, Flipkart
Kalaari CapitalScoopwoop, Industrybuying.com, Cashkaro

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