Venture Capital DefnitionMoney provided by investors to startup frms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. t typically entails high risk for the investor! but it has the potential for above-average returns.More DiscussionVenture capital can also include managerial and technical expertise. Most venture capital comes from a group of wealthy investors! investment banks and other fnancial institutions that pool such investments or partnerships.This form of raising capital is popular among new companies or ventures with limited operating history! which cannot raise funds by issuing debt.The downside for entrepreneurs is that venture capitalists usually get a say in company decisions! in addition to a portion of the e"uity.#tages in venture capital$. #eed Money% &ow level fnancing needed to prove a new idea. '. #tart-up% (arly stage frms that need funding for e)penses associated with marketing and product development. *. +irst-,ound% (arly sales and manufacturing funds. -. #econd-,ound% .orking capital for early stage companies that are selling product! but not yet turning a proft./. Third-,ound% 0lso called Me11anine fnancing! this is e)pansion money for a newly proftable company 2. +ourth-,ound% 0lso called bridge fnancing! it is intended to fnance the 3going public process4+eatures of VCs$. Venture capital investments are made in innovative projects.'. 5enefts from such investments may be realized in the long run.*. #uppliers of venture capital invest money in the form of equity capital.-. 0s investment is made through e"uity capital! the suppliers of venture capital participate in the management of the company.0DV06T07(# 8+ V(6T9,( C0:T0&(conomy 8riented;elps in industrialization of the country;elps in the technological development of the country7enerates employment;elps in developing entrepreneurial skills0DV06T07(# 8+ V(6T9,( C0:T0& s Venture Capitalist Defnitions% 0n 0ngel nvestor is usually a high net worth individual. VCs are typically formed as &imited :artnerships in which the &imited :artners invest in the Venture Capital fund. #i1e of nvestment% 0ngel nvestor usually spends $>-th ? $>$@thof the what VCs do spend in one proAect. Due Diligence% Venture Capitalists have to do a lot more due diligence than 0ngel nvestors do because VCs have a fduciary duty to their &imited :artners. ,isk ,eturns%0ngels are investing earlier than VCs and so they have a higher risk to take into account.