Venture Capital Firm

A firm that provides risk capital to early-stage companies to grow. Venture capital firms are the lifeblood of the innovation economy in the United States.  Venture capital firms are responsible for incubating and funding futuristic companies that have transformed the American economy.  They provide capital usually in rounds based on the stage of development of the business.  Venture Capital firms consist of investment professionals with diverse background including financial, scientific and industry executives.  Venture capital firms decide to invest based on the technological differentiation of the product and the size of the addressable market.  Companies with innovative, next generation products that address vexing customer needs in large markets are candidates for venture capital.   Venture capital firms are distributed according to stage and industry.  Some venture capital firms focus on series A or early stage whereas other firms focus on Series C or D stage which are later or growth stage.  Venture Capital firms value companies based on the future growth potential and size of the market.  Usually, companies receiving capital from venture firms are loss-making.  Despite this, their valuations run in the tens or hundreds of millions due to product differentiation and market size factors.   Underlying most venture capital funded companies is valuable intellectual property which creates a protective moat around the business.