Venture Capital

Venture capital fuels innovation by providing capital to companies too risky for traditional bank loans. VCs take calculated bets on unproven businesses, expecting most to fail but a few to generate massive returns.

How VC Works: 1. VCs raise funds from Limited Partners (LPs) 2. They invest in portfolio companies over 3-5 years 3. Help companies grow over 5-10 years 4. Exit through acquisition or IPO 5. Return capital to LPs (targeting 3x+ returns)

Funding Stages: - Pre-seed: $50K-$500K, idea stage - Seed: $500K-$3M, early product - Series A: $3M-$15M, product-market fit - Series B: $15M-$50M, scaling - Series C+: $50M+, expansion/pre-IPO

What VCs Look For: - Large market opportunity ($1B+ TAM) - Strong founding team - Defensible competitive advantage - Clear path to 10x+ returns - Traction or proof points

VC Trade-offs: Pros: Capital, expertise, network, credibility Cons: Dilution, loss of control, pressure for exits, misaligned incentives

Alternatives: Angel investors, crowdfunding, revenue-based financing, bootstrapping