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April 11, 2017updated 27 Oct 2023 6:58am

What is Venture Capital?

Investors are looking for big returns in tech startups.

By Ellie Burns

Venture Capital, often shortened to VC, is a form of private equity which finances early-stage companies and start-ups.

This investment is usually given to companies expected to have a high growth potential, or have already shown high growth in terms of revenue and employees.

Venture Capital firms invest in start-ups in exchange for equity, or ownership stake, in the company they are funding.

Today, many start-ups looking for funding are usually from the high technology industries, such as social media or IT. Usually, VC funding only happens after a seed funding round. This is a form of securities offering for companies not usually generating its own cash yet.

Who’s raising money?

Tech companies have become a hot focus for VC investment, with the likes of Funding Circle closing a round of funding that took its total raised to $380 million.

ShapeShift, a digital asset exchange for Bitcoin, Ethereum, Dash, Monero, and other blockchain tokens, is another example of a tech company (in the area of fintech) raising VC money.

ShapeShift raised $10.4m in its Series A funding round.

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