Venture Capital Law
Venture Capital (VC) is financial capital provided to young, often high-potential but high-risk, companies, typically at their startup. Venture capitalists are those who invest in these types of businesses. They make their money by owning equity in the companies in which they invest. Most venture capitalists invest in companies with a novel technological innovation or business model, often in industries related to modern technology such as biotechnology, IT, and software.
Typically, a venture capital investment occurs after the seed funding round as part of the growth funding (or "Series A" round). These investments are made in the interest of generating a return through an eventual "realization event," like an Initial Public Offering (IPO) or a sale of the company.
Venture capital is a subset of private equity investments. All venture capital is private equity, but not all private equity is venture capital.
Venture capital is often attractive for new companies with limited history that would otherwise be too small to raise capital in the public markets or to obtain adequate (or any) funding from a bank loan. For investors, the appeal is the potential of a relatively high return on investment in exchange for the high risk that venture capitalists assume by investing in smaller and less mature companies. They also usually gain significant control over company decisions by virtue of taking ownership of a large portion of the company's ownership.
Venture capital investments are regulated as other securities investments. Many of the laws pertaining to venture capitalism are found at the federal level and are administered by the Securities and Exchange Commission (SEC).
For more information about venture capitalism, please review the materials below or use the Law Firms page of our website to find an attorney in your area who can help you with your particular issue.
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