Venture Capital is the capital injection into a company that is in the initial or early development stage. Typically the Venture Capital investment is directed to technology companies or with strong innovative component.
This type of investment requires lower amounts of capital but also the risk is high due to the lack of information from historical results, as well as the uncertainty inherent in ignoring what the acceptance of the product or service will be from the market.
Venture Capital investment can be divided into:
- Seed capital: early investment in business ideas or newly created service or product not yet in the market and, therefore, no sales.
- Start up capital: investment company establishment (registration thereof, web, office …) and start their activity when, despite having sales, the EBITDA of the company is negative. The capital contribution is higher than investments in seed capital.
- When the start up is in a more advanced stage can receive larger funding rounds called “other early stage” (follow on in a start up, involvement in a B or C series of start ups) and “late stage venture“ (investment in companies with sales growth and positive EBITDA).
La inversión de Venture Capital se dirige a empresas tecnológicas o con un fuerte componente innovador.