Importance of Venture Capital for Startups


Venture capital is a source of financing that investors provide to the startups and early age companies, that will have long term growth potential. Venture capital basically comes from big investors, investment banks or financial institutions. Sometimes, startups or early age companies do not get financial support, they also get technical or managerial expertise.

Importance of Venture Capital for Startups

Assist in gaining business expertise

Providing guidance for doing business activities without any failure is one the major advantage of venture capital. The venture capitalists not only provide financial support to start-ups or young business but also provide them with valuable advice, expertise and industry connections. These are the people who have deep knowledge of market and are expert in dealing with typical business decisions such as financial management or human resource management. Venture capitalists using their long-term experience can help early business firms in avoiding numerous downsides that may usually arise with start-ups.   

Promote entrepreneurs

Venture capital serve as an important motivation factor for young entrepreneurs willing to establish their own firm or business venture. The venture capitalists are investor who look for young minds having creative ideas of making profits. Many entrepreneurs carry well technical know-how of business but lacks financial support, so venture capital institutions come here for assistance of such peoples. With support of venture capital, they are able to convert their technical knowledge into commercially viable project. 

Brings out latent talent

The venture capital institutions help in bring out country’s latest talent in front of all. They give thrust to potential talent of young entrepreneurs by providing them funds required for running and growing their business concern. Such institutions work like catalyst for enhancing both financial and managerial talents of borrowing concern. The one borrowing funds will be keen in order to become self-dependent and take all possible steps for early loan repayment.

Assist sick companies

Venture capital proves to be very helpful for sick or loss-making companies. There are numerous firms who face difficulty in running their business efficient due to lack of appropriate planning, decisions and managerial actions. The venture capitalist not only financially support companies but also provide them with expertise of market. These people have great knowledge about market and carries long-term experience that assist early stages firm in saving themselves from downsides. 

Develop more employment opportunities

Venture capital institutions plays an effective role in developing more employment opportunities across the country. They encourage self-employment by promoting entrepreneurship and this also motivate numerous unemployed people in country to take up new ventures having high growth potential. In addition to this, when entrepreneur establish their own business units, they engage large number of peoples with them therefore creating large job opportunities.

Helps technological growth

It support the technological growth of country by funding the high potential start-up business units. Venture capitalists support the idea of young people having high technical know-how to convert it into a successful project generating high profits. When early stage businesses with innovative technology get required funds from venture capital institutions, the modern technology is put to use in country. 

Support development of backward areas

Development of backward areas around the country is also major importance of venture capital. It helps in removing regional disparities by supporting development of industries and business unit in backward areas. When companies get established in such underdeveloped areas, they bring in more infrastructural development opportunities. This eventually improve the living standards of people residing in such backward areas. 

Venture Capital Firms for Startups

  1. Benchmark
  2. Accel
  3. Andreessen Horowitz
  4. FirstMark Capital
  5. Zero2ipo
  6. Founders Fund
  7. Greylock Partners
  8. 5Y Capital
  9. Kleiner Perkins
  10. Sequoia Capital



Seed Money

Seed money means the amount an entrepreneur needs to start his business. Seed money is used by entrepreneurs to make his ideas into reality. This money helps the entrepreneurs to start his idea.

Start Up Money

Startup money is the amount that a startup company needs to market their products or services. This amount basically works to develop the products and services. An entrepreneur needs Startup money when he started business but need more money to scale the business.


Initial- Round funds help the startup to manufacture their products or provide their services in Large scale. When the business is setup and initial goals achieved by the entrepreneur. Now, he wants to target big audience, that time initial round helps to scale the business.


Second-round is the capital for those startups that are selling the products and not getting the profit out of it.


Third-Round financing source helps to grow newly beneficial structure.


it is also known as bridge financing and the proposed for public process financing. it is a situation when business started offering share to the public.



 Personal Investment

When you are going to start your business, you should be the first investor of your own. it should be cash or your own assets. This provides faith to the investor that how much believe you have on your idea.

Love Money

love money is the money you get from your family, friends or relatives. A business relationship should not be taken lightly with family or friends. They are people who believe in your ideas after you.


Angel is the wealthy individual who directly invests in small companies. Angel is the first person in the corporate world, who invest in the company. Angel helps the startups to boost their ideas into reality.

Business Incubators

Business incubators help the startups to provide the non-financial things i.e, office space, marketing etc. This incubator programs help the entrepreneurs to setups .


Startups help the economy to grow and provide taxes to the government. That is why the government has started many programs for startups, they can get funds for their ideas.