Question

What is the strategic role of venture capital in developing entrepreneurship?

Answer 1

Venture capital industry plays a very crucial role in entrepreneurship development. Any Investment can have phases as following and to develop entrepreneurship and large companies, access to capital is required at multiple phases.

1. Friends and family - Very early stage
2. Angel - POC ready with some customer study or traction
3. Super Angel/Seed - Product ready, some market traction, Ongoing Product market fit.
4. Series A - Product Market fit found, Capital need for scaling
5. Series B - More scale, to different geography etc.
6. Series C/D/E - More scale or plan for IPO.

Venture capital primarily provide following to help entrepreneurs -

1. Availability of capital - The most important but not the only contribution. Capital provides life to the enterprise and its functioning.
2. Mentorship - provides guidance and mentorship to entrepreneurs basis his past experiences. It really helps usually when company wants to change its course or pivot to new model.
3. Industry connects - Figure out synergies and help entrepreneurs to grow their business and hire team
4. Support for future rounds - VCs can also help for future rounds of fundings.