What is Venture Capital?

Venture capital is typically defined as capital invested in private companies by way of equity, usually not secured by assets. The scope of such investing covers most industries (typically excluded are real estate, natural resource extraction and retail) and diverse stages of investment.

Venture capital is by definition long term "patient capital" because the "ventures" it supports are usually young and rapidly growing businesses that require time to develop into profitable organizations. The chart at the bottom of this page summarizes the Stages of Equity Investing and shows that venture capital focuses on start-up and early stage companies. However, venture investing may, under certain circumstances, also be appropriate for companies that are in development or are established.

Stages of Equity Investing

DEVELOPMENT VENTURE CAPITAL ESTABLISHED
Seed Start-up 1st Stage 2nd Stage Mezzanine Buyout
proves a concept product development commercial products and sales expansion

not yet profitable		 expansion

profitable		 recapitalization

slower growth

maturing markets