Venture Financing Overview

INTRODUCTION

This practice note discusses venture capital, which is an important source of money for start-up companies that do not have access to the capital markets. It covers what venture capital investors look for as well as the process of seeking and obtaining venture capital support at the various stages of a start-up's growth.

Specifically, this practice note provides an overview of when a start-up might seek venture financing and the common venture financing options, including the structure of the financing and the typical terms applied in:

• Seed-round investments by friends/family or angels
• The initial Series A preferred stock financing round
• Later financing rounds such as the Series B, C, and D preferred stock rounds