How Venture Capital Works - Deepstash

From a venture capitalist’s point of view, the ideal entrepreneur:

  • delivers sales or technical advances such as FDA approval with reasonable probability,
  • tells a compelling story...

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How Venture Capital Works

hbr.org

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Venture capital plays only a minor role in funding basic innovation. In 1997, VCs only invested 6%, or $600 million, went to startups. Around $1 billion of the total venture-capital pool went to R&...

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VC funds have investors in large institutions like pension funds, insurance companies and financial giants. They place only a small fraction of their funds into startups and high-risk investments.

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The initial period in a company’s life cycle in a profitable industry is a time of accelerated growth, except for the concept stocks that are experimental and require a lot of burning capital.

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Any basic deal structure has the same logic: Giving the investors in the VC fund both ample downside protection and a favourable position for additional investment if the company proves to be a...

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The venture capital industry has four main players: entrepreneurs who need funding; investors who want high returns; investment bankers who need c...

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Funds are structured to guarantee partners a comfortable income while they work to generate those returns. 

The venture capital partners agree to return all of the investors’ capital ...

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Assuming that each partner has a typical portfolio of ten companies and a 2,000-hour work year, the amount of time spent on each company with each activity is relatively small. 

If the total ...

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Venture-funded companies attract talented people by appealing to a “lottery” mentality. Despite the high risk of failure in new ventures, engineers and businesspeople leave their jobs because they ...

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By understanding how venture capital actually works, astute entrepreneurs can mitigate their risks and increase their potential rewards. Many entrepreneurs make the mistake of thinking that venture...

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The value of any individual to a VC is a function of the following conditions:

  • the number of people within the high-growth industry that are qualified for the position;
  • the posit...

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I am passionate about Investment and most importantly investing in businesses directly. Had a conversation with the VC Lab on the formation of my new Venture Capital firm and I needed to compare my fundraising strategy with what I can find on the internet, and that led me to this article by Harvard Business Review (One of my favourite places to go lol)

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