Venture Capital

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Wikis > Venture Capital

Definition

Venture Capital, often abbreviated as VC, is the financial capital that is invested into startup companies with high-risk and high-potential. It is a division of private equity and is sometimes referred to as “seed money”. Venture Capital is given to companies through the route of Venture capital firms or by individual venture capitalists.

Structure

Venture capital investment is often organized through Venture capital firms. These firms are typically structured as partnerships, the general partners of which serve as the managers of the firm and will serve as investment advisers to the venture capital funds raised. Venture capital firms in the United States may also be structured as limited liability companies, in which case the firm’s managers are known as managing members. Investors in venture capital funds are known as limited partners. This constituency comprises both high net worth individuals and institutions with large amounts of available capital, such as state and private pension funds, university financial endowments, foundations, insurance companies, and pooled investment vehicles, called fund of fund.