You have most likely heard the term VC capital if you enjoy startups or consider starting your own company. But just precisely what does it mean? And how might it enable you to expand your company?
Let’s dissect it the simplest way we can.
Define VC capital.
Venture Capital, or VC capital, investors provide money to small companies and startups with great future development potential. These investors pay for a portion of the company—known as equity.
Therefore, a startup seeking funds to expand but not wishing to borrow goes to a VC capital firm.
Why Startups Select VC Funds
Indian entrepreneurs seek VC money for several reasons.
- No loan-like pressure for repayment
- Quick access to significant funds
- See professionals for financial guidance
- Gain market credibility
- Quicker expansion and development
The Working Mechanism of VC Capital
Usually, the procedure follows this:
- Startup develops a company concept
- Generates a business plan and pitch deck
- Meets VC companies to introduce their concept
- If so, VC companies fund
- VCs start to be part-owners and help expansion.
Indian Start-ups Supported by Venture Capital
Among the well-known Indian startups benefiting from venture capital money are:
- Flipkart
- Olla
- Withju’s
- Zoma
- Raz pay
With venture capital, all of these began small but expanded greatly.
Benefits of Investing VC Funds
- Get money free from EMI payment
- Stay in touch with seasoned mentors
- Build quickly with the correct tools and team
- Simpler later on in raising more money
Cons:
- Watch out for yourself; you give away a portion of your business.
- VCs could wish for control in decisions.
- High pressure to develop fast and perform.
In India, who is eligible for VC capital?
- Early-stage firms with original ideas
- Companies that can scale quickly
- Those with a clear vision and team
VCs could be interested even if your business is small if the idea is strong.
For your startup, final thought on VC capital
Might be revolutionary. Along with money, it brings direction, help, and a network. Remember, though, you are forfeiting equity; it is not free. Thus, make wise decisions, create a clever strategy, and ensure that your objectives complement the vision of the investor.
