Entrepreneurs tend to have a lot of questions when it comes to securing funding and it's understandable. That's why we have put together this blog to get some of those questions answered.
Venture capital (VC) is a type of private equity, a form of financing that is provided by firms or funds to small, early-stage, emerging firms that are deemed to have high growth potential, or which have demonstrated high growth (in terms of number of employees, annual revenue, or both). Venture capital firms or funds invest in these early-stage companies in exchange for equity, or an ownership stake, in the companies they invest in.
Although the titles are not entirely uniform from firm to firm, positions at venture capital firms include: General Partners or GPs - They run the Venture Capital firm and make the investment decisions on behalf of the fund.
Obtaining venture capital is substantially different from raising debt or a loan. Lenders have a legal right to interest on a loan and repayment of the capital irrespective of the success or failure of a business.
Management fees - an annual payment made by the investors in the fund to the fund's manager to pay for the private equity firm's investment operations. In a typical venture capital fund