Venture Capital

What

A required module of New Venture Finance and supplemental module for other entrepreneurship courses. 

Venture capital is a form of private equity and a type of financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential, or to companies that have grown quickly and appear poised to continue to expand. Venture capital generally comes from well-off investors, investment banks and any other financial institutions. However, it does not always take a monetary form; it can also be provided in the form of technical or managerial expertise. Venture capital is typically allocated to small companies with exceptional growth potential (Investopedia, 2020). 

Learning Objectives

Upon completing this module you should be able to:

• articulate the process involved in securing an investment in a VC-led round (usually starting with Series A, but lately VCs seem to be moving further downstream to focus on later stage rounds like B, C, D, ... You get it).

• articulate the key differences between angel investing and venture capital investing, such as whose money is at stake, timing of investments, and types of benefits and preferential treatment each type of investor gets when they finance you.

• describe the role venture capital industry plays in the process of helping adolescent-stage companies grow dramatically into comparatively mature companies that are attractive candidates for acquisition or an IPO.

Venture capital is one of many source of financing for your venture. I discuss friends and family and angel investors, as well as the tools of equity financing, such as valuation, cap tables, and term sheets, in other parts of this course. 

Instructions

• Watch the assigned videos and presentations; 

• Read the assigned readings; 

• Complete the practice quiz or other assigned practice activity

• Complete the assessment;

• Complete the "Mark as Complete" checklist.

Read

Core readings

Andreessen, M. 2009. But I don't know any VC's!. Pmarca Archives, Part 3. pp. 18-24.

Drory, O. 2024. A scientific approach to VC. NfX.com, February 2024 <-- NEW! (A rule in life: you always get what you incentivize. So you should understand the incentive structure behind venture capital.)

Parker, M. September 15, 2025. Forget warm intros--Customer CEOs are the only way to get VC meetings (Four Insights Substack)

Riggs-Davie, PLC. 2017. Guide to negotiating a venture capital round

Suster, M. 2018. How Many Investors Should You Talk to in a VC Fund Raise? And How Do You Prioritize? https://bothsidesofthetable.com/how-many-investors-should-you-talk-to-in-a-vc-fund-raise-and-how-do-you-prioritize-7be15aa7136e, May 13, 2018. Accessed August 18, 2020

Suster, M. 2018. How to Talk About Valuation When a VC Asks. https://bothsidesofthetable.com/how-to-talk-about-valuation-when-a-vc-asks-7376f5721226, May 30, 2018. Accessed August 18, 2020.

Suster, M. 2019. A Deep Dive into What Has Really Changed in Venture Capital. https://bothsidesofthetable.com/a-deep-dive-into-what-has-really-changed-in-venture-capital-f5d225f7f8 February 7, 2019, accessed August 18, 2020.

Reading used for Spring 2022 class quiz

Notes on Venture Capital (Armstrong notes from Feld and Mendelson (2016), Venture Deals, 3rd Ed., Hoboken, NJ: John Wiley & Sons.

Supplemental Readings

Meet 10 Kickass Black Female Venture Capitalists You Should Know (Sian Morson, 12/12/2019)

Practice

Mark as Complete