What is a Venture Capitalist?
If you aren’t familiar with the startup ecosystem, but have heard news about Uber and Facebook going public, you might have heard the term “venture capitalist,” but really don’t know what that is. So what exactly is a venture capitalist?
Venture capitalists (VCs) are specific types of private equity investors that invest capital into high growth potential companies for an equity stake in said companies. These private companies are generally high-risk early stage companies that do not have access to traditional forms of capital. Venture capitalists invest in these high-risk companies. This is because there is generally massive profits at stake if these companies become a major successes. It goes without saying, but venture capitalists and the firms they are a part of are accredited investors.
VCs are also more than capital providers. Some VCs, like VC firm Andreesen Horowitz, provide exceptional operational expertise in any number of fall into a category of disciplines ranging from engineering, marketing, and more. Others provide a deep network of additional investors, partnerships, and business development opportunities. Ultimately, VCs can become great allies to startups looking to raise capital, but at the price of large equity stakes.
Because of the JOBS Act, you too can act as an venture capitalists for startups you believe in. VC or not, signup for KingsCrowd here to access the best analysis and research on the online private markets.
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About: Francis Vu
An investment professional with a background in private equity and venture capital having spent time conducting investments at VU Venture Partners and Pacific Oak LLC with a finance and management degree from Tulane University.