Venture Capital: A Guide to VC

Venture Capital (VC) is a popular financing approach among SaaS startups, enabling founders to launch and grow their businesses faster than if they would have relied on revenue from customers.

Venture capital (VC) is a type of private equity used to support startups with high growth potential.

Typically, these investments expect to yield outsized returns - "unicorns" that reach 1 billion dollars in valuation.

However, the venture fund size determines the outcome required - as venture capitalists often require that each individual investment should be able to return the entire fund. Due to the risky nature of investing in early stages - where majority of startups go bust or don't yield favorable returns.

Venture Capital (VC) is a sub category of Private Equity (PE).

Private equity focuses on mature companies with proven Product Market Fit (PMF) and > $1M in ARR. Whereas VC nowadays often invest based on only a pitch deck or early signs of PMF. Here is a comparison of VC vs PE:

Some of the most famous Venture Capital funds:

• Sequoia

• Andreessen Horowitz

• Tiger Global Management

• Lightspeed Venture Partners