What Is Venture Capital?

Entrepreneur.com describes a VC as the following:

What It Is: Institutional venture capital comes from professionally managed funds that have $25 million to $1 billion to invest in emerging growth companies.

Appropriate for: High-growth companies that are capable of reaching at least $25 million in sales in five years.

Best Use: Varied. From financing product development to expansion of a proven and profitable product or service.

Cost and Funds Typically Available: Expensive. Institutional venture capitalists demand significant equity in a business. The earlier the investment stage, the more equity is required to convince an institutional venture capitalist to invest. The range of funds typically available is $500,000 to $10 million.

Ease of Acquisition: Difficult. Institutional venture capitalists are choosy. Compounding the degree of difficulty is the fact that institutional venture capital is an appropriate source of funding for a limited number of companies.