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Learning to Invest / Terms, Definitions, & Jargon


Subject:  Re: term Date:  3/19/2001  8:42 AM
Author:  rwoodsco Number:  883 of 2244

A venture capitalist provides the seed money for someone else's ideas.

For example, If I have a great idea for selling pet supplies online using a cute sock puppet as a mascot, I might write up a business plan and send it to some venture capitalists (VCs).

If they agree with me that this idea's going to be successful, then they might give me $X Million to start my business in exchange for Y% of my new company.

VCs are also often involved in later stages of a startup's development, including the IPO.

The key idea is that a venture capitalist provides capital to ventures that desire $$$ to develop/expand in exchange for equity in the venture.

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