Question

Give the meaning of ‘Venture Capital’. Entrepreneurs can seek venture capital to assist various stages in the company’s development. Explain ‘Seed Capital stage’ and ‘Pre-start-up and Start-up stage’ of financing by venture capitalists.

Answer 1

Venture capital is an equity-based investment made in a small to medium-sized corporation with a growth focus that allows investors to achieve their goals in exchange for a minority stake in the company and the irrevocable right to buy.

1. Seed capital stage: This refers to the funding an entrepreneur needs to carry out research at the precommercialization stage. The entrepreneur must persuade the venture capitalist investor that his dream product is worthwhile during this phase.
2. Pre-startup stage: This phase is sometimes called the identification or discovery phase. For SaaS startups, this is a crucial phase. You may see an existing issue and comprehend how your product or service addresses it. At this stage, you conduct an extensive investigation and attempt to comprehend other viewpoints about the issue.
3. Start-up stage: The procedure will proceed to the second step if the concept, item, or procedure qualifies for additional research and/or funding. We refer to this as the starting phase.