Everything You Need To Know About Venture Capital

 Innovation drives the Indian economy. What’s more, it has a powerful grip on the nation’s collective imagination. The popular press is filled with against-all-odds success stories of entrepreneurs. And so for such entrepreneurs and their companies, venture capital investments are without a doubt the backbone behind innovation as they support the company they may invest in, from the early stages, all the way to their up and running business models in action. 

So what exactly does a VC do. The definition says it is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and developing companies that have been considered to have large growth potential or which have already demonstrated tremendous growth. This investment generally comes from well-off investors, investment banks and any other financial institutions.

The financial advisory services the company hires to manage their finances and help them grow their business, will also help you identify the VC that might be investing within your vertical.

Once the VC needs have been identified, the next step is to introduce themselves and how different and innovative their business is. And most importantly, the company needs to highlight why they’re the VC firms best bet at making a return on their investment. We all know how much a first impression matters, so making sure it’s a great one is essential. The better the impression, the more the chance the company has of getting funded.

VCs get a return on their investments through their investing company’s success, through management fees and carried on interest. Carried interest basically refers to a percentage of the profits, lying anywhere between 20%to 25%.

You also need to understand and identify if your company well and truly need a VC investment, as at the end of the day, it’s just a sum of funds that help you start and run your business.