Fund Structure
Venture Capital
A form of private equity financing provided to early-stage, high-growth companies in exchange for equity, with the expectation of outsized returns from a few breakout investments.
Venture capital (VC) is a specialized form of private equity investing focused on early-stage companies with high growth potential. VCs pool capital from institutional investors (LPs) into funds, then deploy that capital into startups in exchange for equity stakes. The VC model is predicated on power law returns: most investments lose money or return little, but the rare breakout companies (Google, Airbnb, Stripe) generate 100x+ returns that more than compensate for all failures. This requires VCs to seek companies with potential for massive outcomes — 'venture-scale' businesses targeting large markets with differentiated technology or business models. The modern VC industry emerged in Silicon Valley in the 1970s (Kleiner Perkins, Sequoia) and has since grown into a global asset class managing over $1 trillion in committed capital.