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WHAT IS A VENTURE CAPITAL FUND?

June 17, 2021

Navigating through all the startup and VC world terms can be exhausting and confusing, especially if you have just embarked on a journey of fundraising, setting your own company, and overall trying to keep your head above the water while making your business survive and thrive in today’s economy.

With this in mind, and with a great desire to help all present and future FRC founders and all those who are interested in the topic, we at Fil Rouge Capital have decided to guide you through some of the buzzwords from the very dynamic and ever-changing venture capital industry by offering you a relevant source of information on the specific topic at hand.

As they say, it is always best to start from the beginning, so we want to familiarize you with the term ‘Venture Capital Fund’, its origins, definition, types, and how it differs from mutual funds and hedge funds.

What is the definition of a Venture Capital Fund & understanding VC Funds?

Venture capital funds are investment funds that manage the money of investors who seek private equity stakes in startup and small- to medium-sized enterprises with strong growth potential. These investments are generally characterized as high-risk/high-return opportunities.”

Read more below:

Investopedia

Financial Dictionary

Private Equity and Venture Capital Knowledge Center

Startup financing: Venture capital (VC) and private equity

How does a Venture Capital Fund work?

“There are two key elements within a VC fund: general and limited partners. The general partners are the people in charge of making investment decisions (finding and agreeing to terms with startups and companies) and working with startups to grow and meet their goals. On the other hand, there are limited partners, the people, and organizations who provide the capital necessary to complete those investments.”

Read more below:

How Venture Capital Works pt 1.

How Venture Capital Works pt 2.

How Venture Capital Works pt 3.

How Venture Capital Works pt 4.

Types of VC funds

There are three main categories of venture capital financing, each with its own subcategories:

  • early stage
  • expansion
  • acquisition/buyout financing.

Different types of Venture Capital, sorting it out once and for all.

What You Should Know About Early-Stage Venture Capital Before Pursuing It

PLUS- What venture capitalists look for: 6 things VCs want to see before they invest

“Before they give you a cent, VCs will do due diligence and ask you some hard questions. You will need to be ready and have the answers.

Although you need to showcase your passion and commitment when sharing your vision and the opportunity before you, this is not a time for selling the sizzle. This is a potential partner you’re talking to. The best approach is to be truthful and authentic.”

Read the full article here.

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