Many of the world’s best known companies began life with venture capital funding. In the UK, this includes the likes of Skyscanner, Seatwave and Moshi Monsters, and globally household names such as Google, Facebook and Skype all received venture backing in their early stages.
VCs take minority stakes in businesses, very often alongside other VCs and investors. Early-stage companies raise money in ‘rounds’ - Series A, B, C etc - which will see further investment from either the same investors and/or new ones to support the company as it grows. Many start-ups will also receive funding prior to Series A, via angel investment, crowdfunding, grants, incubators or even friends and family.
Together, these form what is known as the ‘innovation eco-system’, a funding chain that provides capital and business expertise to early-stage, fast-growing companies at different stages in a company’s life. Venture capital houses typically hold their investments for between five and seven years, at which point the business will either be floated on the stock exchange, acquired by a multinational corporate or another investor such as a private equity house.