Startup Venture Capital 101
Startup capital is the capital that an entrepreneur needs to pay the necessary items needed when starting a business, like business space, equipment, supplies, and employee’s paychecks. Meanwhile, venture capital is the fund that a venture capital (VC) firm or an angel investor would provide to a starting or trouble-laden business. Unlike loans, venture capital is invested in the business rather than being returned. With bank loans, for example, the money borrowed should be returned within a specific period of time along with interests and other fees. But with venture capital, the money is provided in exchange of equity in the business. The venture capital firm would take part in the business, they could have one of their own to be a member of the board of directors. Aside from having a portion of the company, the VC would also have the right in knowing the operation of the business. Their opinions would matter especially when making decisions in the company. VCs rarely concern themselves with the daily operation of the business unless the life of the company or business is being threatened. Aside from this, the VCs’ opinion would also matter and they could prohibit the portfolio company to close down. The difference between a venture capital firm and an angel investor is simple. An angel investor does not operate like a firm and more of a wealthy...
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