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If You Know Nothing About Venture Capital, Watch This First | Forbes

venture capital is something you hear

about all the time in tech but do you

know what it is or how it works could

you explain it to people at a party well

if not we got you venture capital is

money that is provided by investors to

startups that have the potential to

reshape markets and grow very fast the

money deployed by a VC firm usually

comes from institutional investors

corporations or wealthy individuals

looking to make some serious dough let's

say Jayne and Brian have a camera app

that's getting a lot of customers and

media attention they know their little

company could be ballin one day but the

banks are hesitant to lend the money

because they think it's too risky

but Marcus a successful VC looks at what

Jayne and Brian have done and thinks the

benefits outweigh the risks he gets to

know the to learns about their product

reads the business plan and finds out

how much they've done so far Marcus

likes what he sees and decides to invest

in Jayne and Brian's company he does the

same in varying amounts to other

startups with similar potential because

in the VC game you need a back-up plan

about three out of every four startups

fail so VC has to make sure the projects

that do make money make enough of it to

cover the losses of the failures they

also have to make sure that the parties

who back them get a healthy return on

their investment even with the risks VCS

love tech startups because of their

ability to scale easily as for how much

money Jayne and Brian would get that

depends on where their company is at

seed funding is at the earliest stage

basically something to get the party

going Series A is for when the company

has established product and market fit

started to make some serious buzz and

its customer base is growing fast

Series B is when the company has started

to make some considerable revenue in

select markets and is looking to expand

operations Series C and onwards is when

the company has grown up and is likely

operating on a global scale it may be

ready for an IPO to be bought out by

another company or continue operating as

a private firm so let's say Jayne and

Brian have stayed in the game gone

through Series C and are now ready for

the next step they decide to IPO making

their company public on the stock market

that goes well and Marcus sees a nice

return on his initial investment so

there you have it

venture capital is a high-risk

high-reward game that funds innovative

ideas and keeps the tech world going