Venture Capital 101: Structure, Returns, Exit and Beyond

This post will tell you all the basics you need to know about venture capital. If you have questions, feel free to email me at hello@sogalventures.com.

This is the fourth post of study notes from the Insider’s Guide to Silicon Valley Investing program with Stanford University and 500 Startups. This part was taught by Mike Lyons and Pedram Mokrian. This is one of the longer posts.

What Is Venture Capital?

Venture capital is equity financing, where an investment partner sits along side the entrepreneur and assists in strategically MANAGING RISK associated with building high potential, fast growth and capital efficient companies.

Venture capital is NOT:

- Rich people spreading money in outlandish and risky ideas

- Corporations seeking out ideas to steal and build on their own

- Highly structured financial transactions

- Debt or buyout equity capital with majority ownership

Bottom line: You shouldn’t structure your way to returns (because you can’t).

Three Types of Venture Capitalists