Getting money to start and grow a business is a big deal. It’s not just one lump sum; it happens in stages, kind of like leveling up in a game. Each stage of venture capital financing has its own goals and what investors are looking for. Understanding these different steps helps both founders and investors know what to expect and how to prepare for the next move. It’s all about matching the company’s needs with the right kind of money at the right time.
Key Takeaways
- The journey of venture capital financing stages typically starts with seed funding, where founders get initial capital, often from personal funds, friends, family, or angel investors, to get their idea off the ground.
- Series A funding focuses on companies that have proven their business model and are ready to scale operations and capture market share, attracting more institutional investors.
- Series B and C rounds are about accelerating growth, expanding into new markets, and building a strong competitive position, often involving strategic moves like acquisitions.
- Later stage financing prepares companies for a public offering or acquisition, focusing on profitability and solidifying their market standing.
- Throughout all these venture capital financing stages, decisions about company valuation, deal structure, and managing risks are critical for success and ensuring a good return for everyone involved.
Seed Stage Venture Capital Financing
The seed stage is where many ambitious ideas first get the fuel they need to take flight. It’s the very beginning, often before a company has a solid product or a clear path to making money. Think of it as planting a tiny seed and hoping it grows into a mighty tree. This is where founders often put in their own money, or get help from friends and family. It’s a high-risk, high-reward phase, and investors here are betting on the vision and the team more than anything else.
Initial Capital Infusion
This is the first real money a startup gets. It’s not usually a huge amount, but it’s enough to get the ball rolling. This funding is typically used for things like developing a prototype, conducting market research, and building a basic team. The goal is to prove the concept and show that there’s a real need for the product or service. Without this initial push, many great ideas might never get past the drawing board.
Founder’s Capital and Bootstrapping
Before any outside money comes in, founders usually invest their own savings. This is called founder’s capital. Bootstrapping is when a company uses its own revenue to fund its growth, rather than relying on external investors. It means being really smart with every dollar spent. Founders might delay their own salaries or work out of a garage to keep costs down. It shows a strong commitment and a belief in the business’s potential. This self-funding approach can also mean founders retain more control over their company.
Angel Investment and Early Backers
Once founders have put in their own money, they often turn to angel investors. These are typically wealthy individuals who invest their personal funds in early-stage companies. They often bring valuable experience and connections along with their capital. Sometimes, these investments are made through angel groups or networks. These early backers are taking a significant gamble, but if the company succeeds, the returns can be substantial. It’s about finding people who believe in the vision and are willing to support it from the ground up. Finding the right angel investors can make a huge difference in a startup’s trajectory.
Series A Venture Capital Financing
Initial Capital Infusion
After the initial seed funding, Series A is often the first significant round of institutional capital a startup secures. The primary goal here isn’t just getting more money; it’s about proving the business model and showing that the company can actually grow. Think of it as moving from a promising idea to a real, functioning business with customers and revenue. This funding is typically used to scale operations, expand the team, and really push into the market. It’s a big step, and it means investors are looking for concrete evidence of traction.
Founder’s Capital and Bootstrapping
While Series A is about external investment, the groundwork laid by founders is still incredibly important. The capital founders initially put in, often called ‘founder’s capital,’ and any money the company made through early sales (bootstrapping), shows commitment and resourcefulness. This early effort demonstrates to potential Series A investors that the founders are serious and have already overcome some initial hurdles. It’s a sign that they’ve been smart with limited resources before asking for more.
Angel Investment and Early Backers
Angel investors and other early backers who participated in seed rounds often play a role in Series A as well. They might reinvest, or their initial belief in the company can help attract larger institutional investors. These early supporters have a history with the company and can provide valuable insights and connections. Their continued involvement signals confidence and can make the Series A round smoother. It’s a good sign when those who got in early are still on board for the next phase of growth. The capital raised in this stage is critical for scaling operations and market penetration.
Scaling Operations and Market Penetration
With Series A funding secured, the focus shifts dramatically. Companies now have the resources to really build out their infrastructure, hire key personnel, and ramp up marketing and sales efforts. This means moving beyond just having a product to actually getting it into the hands of a much larger customer base. It’s about establishing a solid foothold in the market and starting to gain significant market share. This phase requires careful planning and execution to make sure the growth is sustainable and efficient.
Establishing a Proven Business Model
Series A is fundamentally about validating the business model. Investors want to see that the company isn’t just selling a product or service, but that it has a repeatable and scalable way of acquiring customers, generating revenue, and making a profit. This involves looking at key metrics like customer acquisition cost (CAC), lifetime value (LTV), churn rates, and gross margins. If these numbers look good and show a clear path to profitability, it makes the company much more attractive for future funding rounds. The goal is to demonstrate a clear path to profitability.
Attracting Institutional Investors
While seed rounds might involve individual angel investors, Series A typically attracts larger, institutional investors like venture capital firms. These firms have more capital to deploy and often look for more mature companies with proven traction. Successfully closing a Series A round means the company has met certain milestones and demonstrated enough potential to warrant significant investment from these professional money managers. This often involves a more rigorous due diligence process and more complex deal terms. Understanding the cost of capital becomes increasingly important as these larger sums are involved.
Series B Venture Capital Financing
Series B funding marks a significant step up from earlier rounds. It’s typically when a company has shown it can execute its plan and is ready to really grow. Think of it as moving from proving the concept to actually building a substantial business.
Accelerating Growth and Expansion
At this stage, the focus shifts heavily towards scaling. This means expanding the team, increasing marketing efforts, and potentially entering new geographic markets. The goal is to capture a larger share of the market and build momentum. It’s about taking what works and doing more of it, faster. This often involves significant investment in infrastructure and talent to support the increased operational tempo. The company is no longer just surviving; it’s actively trying to dominate its niche.
Market Leadership and Competitive Advantage
Series B is often about solidifying a company’s position. This means outmaneuvering competitors and building a defensible market position. It might involve developing new product features, improving customer service, or creating network effects that make it harder for others to compete. The aim is to become the go-to solution in the industry. Building a strong brand and customer loyalty becomes paramount. This phase requires a clear strategy for how the company will maintain its edge as it grows.
Diversifying Revenue Streams
While the core product or service is still key, Series B funding can also be used to explore new ways to generate revenue. This could involve developing complementary products, expanding into related service areas, or exploring different pricing models. Diversification helps reduce risk and opens up new avenues for growth. It’s about building a more robust business model that isn’t solely reliant on one offering. This might look like:
- Developing add-on services or premium features.
- Exploring B2B or enterprise-level solutions if the initial focus was B2C.
- Creating strategic partnerships that open up new customer segments.
This stage is critical for transitioning from a promising startup to a mature, scalable enterprise. The capital raised here is used to build out the operational capacity and market presence needed to compete effectively and sustainably. It’s a period of intense activity and strategic execution, often requiring experienced leadership to guide the expansion.
Companies at this stage are often looking for investors who can bring more than just capital, such as strategic guidance and industry connections. The valuation at Series B reflects the company’s proven traction and future potential, making it a key moment for both founders and investors. Understanding the cost of capital becomes even more important as the company takes on larger sums to fuel its growth. Many companies also consider issuing corporate bonds at later stages, but Series B is typically still equity-focused.
Series C Venture Capital Financing
By the time a company reaches Series C funding, it’s usually past the initial hurdles and has a solid grasp on its market. This stage is all about really pushing the accelerator, aiming for significant growth and solidifying its position as a leader. Think of it as moving from a strong contender to a dominant force.
Accelerating Growth and Expansion
This is where the big money really starts to flow, enabling companies to scale up operations dramatically. It’s not just about doing more of the same; it’s about doing it better, faster, and reaching a much wider audience. This often involves expanding production capabilities, building out sales and marketing teams to capture more market share, and investing in infrastructure to support this rapid growth. The goal is to become a household name, or at least a well-recognized player, in your industry.
Market Leadership and Competitive Advantage
Series C funding is often used to build a strong competitive moat. This could mean acquiring smaller competitors, investing heavily in research and development to create proprietary technology, or building out a robust brand that resonates with customers. The aim is to create a sustainable advantage that makes it difficult for rivals to catch up. It’s about moving beyond just competing to setting the pace for the entire industry. This stage is critical for establishing long-term dominance.
Diversifying Revenue Streams
While a company might have a core product or service that’s proven successful, Series C is a prime time to explore new avenues for revenue. This could involve launching complementary products, expanding into new geographic markets, or developing subscription models. Diversification helps to stabilize the business, reduce reliance on any single income source, and open up new growth opportunities. It’s about building a more resilient and multifaceted business model. For instance, a software company might move from a one-time license fee to a recurring subscription service, or a product company might develop an associated service offering. This strategic move can significantly improve working capital management and overall financial health.
Later Stage Venture Capital Financing
Once a company has really found its footing and is showing solid growth, it often enters the later stages of venture capital financing. This isn’t about just getting off the ground anymore; it’s about solidifying a market position and preparing for the long haul, whether that means going public or becoming a major player in its industry. Think of it as moving from building the house to furnishing it and making sure the neighborhood is secure.
Pre-IPO Preparations
Getting ready for an Initial Public Offering (IPO) is a big deal. It involves a lot of cleaning up the financial house, making sure everything is transparent and ready for public scrutiny. This means having really solid financial statements, clear governance structures, and a management team that can handle the pressures of being a public company. It’s about making sure the company looks as attractive as possible to a wide range of investors. This stage often involves bringing in more experienced financial advisors and potentially restructuring the company to meet regulatory requirements. The goal is to make the transition as smooth as possible, setting the stage for a successful debut on the stock market.
Profitability and Sustainable Operations
By this point, the focus shifts heavily towards profitability and making sure the business can stand on its own two feet without constant infusions of cash. It’s not just about revenue growth anymore; it’s about efficient growth. Companies at this stage are looking at their cost structures, optimizing operations, and ensuring that their business model is not just viable but also consistently profitable. This often means making tough decisions about product lines, market focus, or operational efficiencies. The aim is to build a business that generates enough cash to reinvest in itself and provide returns to investors, demonstrating a clear path to long-term financial health. Building a discounted cash flow model becomes even more critical here, as investors want to see predictable future earnings. Estimating intrinsic value is key.
Consolidating Market Position
Later stage financing is also about defending and expanding market share. This could involve strategic acquisitions to bring in new technologies or customer bases, or it could mean investing heavily in marketing and sales to outmaneuver competitors. The company is no longer just a startup; it’s a significant entity that needs to act like one. This might involve building out a more robust sales force, expanding into new geographic regions, or developing complementary products and services. The objective is to become indispensable to customers and difficult for rivals to displace. This phase requires careful consideration of the company’s overall capital structure, balancing the need for growth capital with the desire to maintain financial flexibility.
Valuation and Investment Decisions
Figuring out what a company is actually worth is a big part of venture capital. It’s not just about the numbers on a spreadsheet; it’s about looking ahead and making some educated guesses. You’ve got to estimate the company’s intrinsic value, which is basically what it should be worth based on its future earnings and potential. This is where things get interesting, because different people can look at the same company and come up with wildly different valuations.
Estimating Intrinsic Value
So, how do you even start estimating this intrinsic value? A common method is the discounted cash flow (DCF) analysis. You project how much cash the company will generate in the future and then discount those future cash flows back to today’s dollars. This accounts for the time value of money – a dollar today is worth more than a dollar next year, right? A big part of DCF is the terminal value, which tries to capture the company’s worth beyond the explicit forecast period. This often represents a huge chunk of the total valuation, so getting it right is pretty important. You can calculate terminal value using methods like the Gordon Growth Model or by applying market multiples. The Gordon Growth Model is one way to think about that perpetual growth.
Price Versus Value Considerations
Here’s where it gets tricky: the market price of a company’s shares might not always match its intrinsic value. Sometimes, a company might be trading at a premium because of hype or market sentiment, while other times, it could be undervalued. As an investor, your job is to figure out if the price you’re being asked to pay is a good deal compared to what you think the company is truly worth. It’s like buying something on sale – you want to pay less than its actual worth. This difference between price and value is where potential profits lie.
Impact of Overpayment on Returns
Paying too much for an investment can really hurt your returns down the line. Even if the company does well, if you overpaid significantly, your profit margin shrinks. It’s like starting a race with a handicap. You might still finish, but it’s a lot harder to win. Overpaying can mean that even with strong performance, you might not achieve the return targets you set out for yourself. It’s a good reminder to stay disciplined and not get caught up in the excitement of a deal if the valuation doesn’t make sense.
Here are some key factors that influence valuation decisions:
- Financial Performance: Historical revenue, profitability, and cash flow are foundational.
- Growth Prospects: The potential for future expansion and market penetration.
- Market Conditions: The overall economic climate and industry trends.
- Competitive Landscape: The company’s position relative to its rivals.
- Management Team: The experience and capability of the leadership.
Ultimately, valuation is a blend of art and science. While quantitative models provide a framework, qualitative factors and a bit of investor intuition play a significant role in arriving at a decision. It’s about making a judgment call based on the best available information.
Deal Structuring in Venture Capital
When venture capitalists decide to invest, they don’t just hand over a check. The way a deal is put together, or structured, is super important. It sets the rules for how the money flows, who has what say, and how everyone gets paid back, especially if things go really well or, you know, not so well.
Equity and Debt Instruments
Most venture capital deals involve equity, meaning the investor gets a piece of ownership in the company. This is usually done through preferred stock, which gives investors certain rights over common stockholders (like founders and employees). Think of it as getting a special kind of share that has some built-in protections and potential upside.
- Preferred Stock: Often comes with liquidation preferences (meaning investors get their money back before others in a sale), anti-dilution clauses (to protect their ownership percentage if the company issues more stock at a lower price), and sometimes dividend rights.
- Common Stock: This is what founders and employees typically hold. It has less priority than preferred stock but offers unlimited upside potential.
Debt instruments, like convertible notes or venture debt, are less common in early-stage VC but can be used. Convertible notes are essentially loans that can convert into equity later, often at a discount. Venture debt is a loan specifically for venture-backed companies, usually taken on when a company is more established and needs capital without giving up more equity.
Hybrid Financing Options
Sometimes, deals aren’t just pure equity or pure debt. Hybrid options try to blend the benefits of both. Convertible notes are a prime example, offering debt-like downside protection with equity-like upside potential. Another might be warrants, which give the investor the right to buy more stock at a set price in the future. These can be attached to an equity or debt deal to sweeten the pot for the investor.
Terms Influencing Control and Risk
The specific terms in a deal agreement are where a lot of the negotiation happens. They dictate how much control investors have and how risk is shared.
- Board Seats: Investors often want a seat on the company’s board of directors. This gives them direct insight into the company’s operations and a say in major decisions.
- Protective Provisions: These are clauses that require investor approval for certain major company actions, like selling the company, taking on significant debt, or issuing new stock. They act as a check on the founders’ power.
- Vesting Schedules: For founders’ stock, vesting schedules ensure that founders earn their ownership over time. If a founder leaves early, they don’t get to keep all their shares, which protects the company and remaining stakeholders.
- Information Rights: Investors will want regular financial reports and access to company information to monitor their investment.
The structure of a venture capital deal is a carefully crafted agreement designed to align the interests of founders and investors while managing the inherent risks of early-stage companies. It’s a balancing act that determines how value is created and distributed throughout the life of the investment.
Here’s a quick look at how different instruments might be structured:
| Instrument | Primary Form | Investor Benefit | Founder Consideration |
|---|---|---|---|
| Preferred Stock | Equity | Liquidation preference, anti-dilution, control rights | Dilution of ownership, potential restrictions |
| Convertible Note | Debt/Equity | Debt protection, equity upside, conversion discount | Deferred equity decision, potential future dilution |
| Venture Debt | Debt | Capital without immediate equity dilution | Repayment obligation, interest costs, covenants |
| Warrants | Equity Option | Potential for future equity at a set price | Potential future dilution |
Risk Management in Venture Capital
Managing risk is a big part of venture capital, maybe even the biggest. It’s not just about finding the next big thing; it’s about making sure you don’t lose your shirt along the way. Venture capital inherently involves putting money into companies that are often unproven, so there’s a lot of uncertainty. You’re dealing with potential failures, market shifts, and a whole host of other things that can go wrong.
Assessing Risk-Adjusted Returns
When you’re looking at a potential investment, you can’t just look at how much money you might make. You have to consider how much risk you’re taking on to get that potential return. This means looking at things like how likely the company is to succeed, what the competition looks like, and the overall economic climate. It’s about getting a realistic picture, not just a rosy one. We often use frameworks to help with this, trying to quantify the potential upsides against the downsides. It’s a balancing act, for sure. You want high returns, but not at any cost. Understanding the time value of money is also key here, as future returns need to be discounted back to today’s value, factoring in the risk involved.
Mitigating Downside Exposure
So, how do you actually protect yourself from losing money? There are a few ways. Diversification is a big one – don’t put all your eggs in one basket. Spreading your investments across different companies, industries, and even stages of development can help. Another approach is through careful due diligence. Really digging into the company’s financials, its team, and its market is super important. You also look at the terms of the deal itself; sometimes specific clauses can offer some protection. It’s about building a portfolio that can withstand some hits.
Here are some common strategies:
- Diversification: Spreading investments across multiple companies and sectors.
- Due Diligence: Thoroughly researching the company, its market, and its team.
- Staged Funding: Releasing capital in tranches based on performance milestones.
- Active Monitoring: Keeping a close eye on portfolio companies and market trends.
It’s easy to get caught up in the excitement of a new venture, but a disciplined approach to risk management is what separates successful venture capitalists from the rest. It’s about making informed decisions, not just hopeful ones.
Managing Liquidity and Funding Risk
Liquidity risk is a real concern in venture capital. Your money is tied up in these private companies for a long time, and you can’t just sell your stake easily like you can with public stocks. This means you need to plan carefully for how you’ll get your money back. Funding risk is also important – will the company be able to raise more money if it needs it? We look at the company’s burn rate and its ability to attract future investment. Sometimes, a company might be doing well operationally but struggle to secure the next round of funding, which can be a problem. It’s why understanding the broader investment landscape is so important for making sound decisions.
| Risk Type | Description |
|---|---|
| Market Risk | Changes in the overall economy or industry affecting company performance. |
| Operational Risk | Issues within the company’s operations, management, or technology. |
| Liquidity Risk | Difficulty in selling an investment quickly without a significant loss. |
| Funding Risk | The company’s inability to secure future capital when needed. |
| Execution Risk | The company’s failure to implement its business plan effectively. |
Capital Allocation and Deployment
Strategic Deployment of Funds
When venture capital firms invest, they’re not just handing over cash; they’re making a calculated decision about where that money will do the most good. It’s about putting capital to work in ways that will help the company grow and eventually provide a return. This means looking closely at the business plan and figuring out the best places to spend the money. Is it R&D? Marketing? Hiring more people? The firm needs to have a clear idea of how the funds will be used to achieve specific milestones. This strategic deployment is often more important than the specific investment itself. It’s about setting the company on the right path from the start. Think of it like planning a road trip; you need to know your destination and the best route to get there, not just have a full tank of gas.
Opportunity Cost Awareness
Every dollar a venture capital firm invests is a dollar they can’t invest somewhere else. This is the concept of opportunity cost. They have to constantly weigh the potential returns of investing in one startup against the potential returns of investing in another, or even in a different asset class altogether. If they put $5 million into a biotech startup, they’re giving up the chance to put that same $5 million into a fintech company that might have a faster growth trajectory. This awareness forces them to be disciplined and selective, only backing opportunities they believe have the highest potential for significant returns. It’s a constant balancing act, trying to pick the winners from a crowded field.
Adapting to Market Conditions
Markets aren’t static, and neither are the strategies for deploying capital. A venture capital firm needs to be flexible. What worked last year might not work today. For instance, if the overall economy starts to slow down, a firm might shift its focus from high-growth, cash-burning startups to more established companies with proven business models and a clearer path to profitability. They might also adjust their investment pace, perhaps slowing down new investments if market valuations seem too high. This adaptability is key to managing risk and making sure the capital they manage continues to perform well, even when things get a bit bumpy. It’s about staying agile and responsive to the changing economic landscape, much like a sailor adjusts their sails to the wind. Understanding how to manage risk is a big part of this, and it’s something that [venture capital firms] (https://scopedfinance.com/capital-budgeting-decision-frameworks/) are always thinking about.
Liquidity Events and Exits
So, you’ve poured your heart, soul, and a whole lot of capital into a startup. Now what? The ultimate goal for many investors and founders isn’t just building a great company, but eventually cashing out. This is where liquidity events, or exits, come into play. They’re the moments when that illiquid ownership stake in a private company transforms into actual cash or publicly traded stock. It’s a big deal, marking the culmination of years of hard work and strategic planning.
Converting Illiquid Investments
Think of your investment in a startup like owning a piece of art. It’s valuable, sure, but you can’t exactly use it to buy groceries. It’s tied up. A liquidity event is like selling that art piece at a gallery – it turns that value into spendable money. For venture capitalists, this is the endgame. They invest with the expectation that the company will grow significantly, making their initial stake worth much more down the line. Without a clear path to liquidity, the entire venture capital model wouldn’t work. It’s about realizing the gains from taking on significant risk early on. Planning for mid-term capital needs is also important, as it helps align investment strategies with your timeline [fbb4].
Initial Public Offerings (IPOs)
An IPO is probably the most talked-about exit. It’s when a private company decides to sell shares to the public for the first time, listing on a stock exchange like the NYSE or Nasdaq. This process is complex and requires a lot of preparation, including rigorous financial audits and regulatory filings. Companies often go public when they’ve reached a certain scale and need more capital for further expansion, or when early investors want a way to sell their shares. It provides a significant cash infusion for the company and allows investors to trade their shares on the open market. However, it also comes with increased scrutiny and reporting requirements.
Mergers and Acquisitions (M&A)
Another common exit route is through a merger or acquisition. This is when your company is bought by another, larger company, or when it combines with another entity. Sometimes, the acquiring company is a strategic player in the same industry looking to expand its market share or acquire new technology. Other times, it might be a private equity firm looking to take the company private again or restructure it. M&A deals can offer a quick and often lucrative exit for investors and founders. The terms of the deal, including the purchase price and whether it’s an all-cash or stock deal, are heavily negotiated. Successful integration after an acquisition is key to realizing the full value of the transaction.
The choice between an IPO and an M&A event often depends on market conditions, the company’s specific growth trajectory, and the strategic goals of both the company and its investors.
Here’s a look at how these events can play out:
- IPO: Company goes public, shares are traded on an exchange. Investors can sell shares on the open market.
- Acquisition: A larger company buys your company. Investors receive cash or stock in the acquiring company.
- Merger: Your company combines with another. Shareholders receive shares in the new, combined entity.
Ultimately, a successful exit isn’t just about the transaction itself; it’s about achieving the financial objectives that were set out at the beginning of the investment journey. It validates the initial investment thesis and provides the capital needed for future ventures. Companies must strategically allocate capital, considering internal and external growth, debt repayment, and shareholder returns [213a].
Wrapping Up the Funding Journey
So, we’ve walked through the different stages of getting venture capital, from those very first checks to the bigger rounds that really help a company take off. It’s a lot to take in, and honestly, it’s not always a straight line. Each phase has its own set of challenges and what investors are looking for changes as you grow. Remember, it’s about more than just the money; it’s about finding partners who believe in your vision and can help you get there. Keep learning, stay adaptable, and focus on building something solid. That’s usually the best way to navigate the whole venture capital landscape.
Frequently Asked Questions
What is venture capital and why do companies use it?
Venture capital is like getting money from investors to help a business grow. Companies use it because they need more cash than they can make themselves to expand, create new things, or reach more customers. It’s a way to get a big boost for their business.
What’s the difference between Seed and Series A funding?
Seed funding is the very first money a startup gets, often from friends, family, or early believers, to get the basic idea going. Series A is the next big step, where investors give more money once the company has shown it has a working plan and is ready to grow bigger.
Why do companies go through multiple funding rounds like Series B and C?
Think of each series as a new level in a game. Series B helps a company speed up its growth and become a leader in its field. Series C is for even bigger goals, like expanding to other countries or buying other companies, to become a major player.
What does ‘valuation’ mean when talking about venture capital?
Valuation is basically figuring out how much a company is worth. Investors use this to decide how much of the company they should get in return for their money. It’s like deciding how big a slice of the pizza you get based on how much you paid for it.
What are some common ways venture capital deals are structured?
Deals often involve selling parts of the company (equity) or taking out loans (debt). Sometimes, they mix these. The details of the deal, like who makes decisions and how risks are shared, are super important.
How do venture capitalists manage the risks involved?
Venture capitalists are smart about risk. They look closely at potential returns compared to the chances of losing money. They try to avoid big losses and make sure they can get their money back, even if things don’t go perfectly.
What is ‘capital allocation’ in the context of venture capital?
Capital allocation means deciding where the invested money should be spent. Should it go towards marketing, hiring more people, or developing new products? Smart allocation helps the company grow in the best way possible.
What are the different ways a venture capital investment can end (liquidity events)?
Eventually, investors want their money back, plus more! This usually happens in a few ways: the company goes public through an IPO (Initial Public Offering), it gets bought by another company (M&A), or sometimes through other deals. These are called ‘exit events’.