Venture Capital
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What Is Venture Capital? | Venture Capital Explained
Venture capital is a type of private financing geared for young startups. Learn all about it here with Titan's Christopher Seifel.
Video Transcript
Venture Capital is a form of private equity in which investors provide financing to small businesses and startups that are believed to have long term growth potential. These investments are riskier than traditional private equity, since younger companies have a higher chance of failure. Venture Capital investment portfolios are constructed based on power law distributions. This means that a small proportion of investments will drive the entire fund's return. As long as a few investments succeed, it doesn't really matter if most fail, the fund will still be successful.
There are various stages of Venture Capital investments that correspond to the age of the company being invested in. You may have heard these before, Series A, B, C, D, et cetera. Venture Capital firms can either specialize in a specific segment or invest along the continuum. Fun fact, the first modern Venture Capital firm was the American Research and Development Corporation, founded in 1946 by Harvard Business School professor George Dorio. He's known as the father of Venture Capital.
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