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What is venture capital?
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Quick answer
Venture capital (VC) is money invested in early-stage, high-growth startups in exchange for ownership (equity). Investors accept high risk — most startups fail — betting that a few big winners will more than make up for it. VCs fund risky young startups in exchange for equity.
Key things to understand
- VCs fund risky young startups in exchange for equity.
- They expect most to fail and a few to return huge gains.
- Funding comes in 'rounds' (seed, Series A, B…) as the startup grows.
- VCs often add guidance, networks, and hiring help, not just money.
People also ask
How does venture capital work?
Investors buy equity in startups, aiming for a few to grow enormously and return far more than the losses on the rest.
What is a funding round?
A stage of raising money (seed, Series A, etc.) as a startup grows and needs more capital.
How is VC different from a loan?
A loan must be repaid with interest; VC buys ownership and is only 'repaid' if the company succeeds.