Venture capital (VC) is a great opportunity for new entrepreneurs seeking to bring a product to life — but the funding is incredibly difficult to secure.
A 2021 Harvard Business Review survey of almost 900 VC firms found that they consider 101 opportunities on average for every deal they close.
Still, the benefits of VC funding are clear.
Since it took off just after the Second World War, VC funding has become more prolific, with many large companies now sporting their own corporate VC arm.
In contrast to private equity — which is more inclined to fund projects from large, established companies — venture capital is designed to fund emerging startups and entrepreneurs.
Entrepreneurs don’t need to have an extensive business background or enough cash flow or assets to risk debts, as a bank loan requires. The same HBR survey reported that 20 percent of all VC firms and 31 percent of early-stage VC firms don’t even forecast company financials before investing. And if a VC-backed project fails, the entrepreneur doesn’t lose any of their own money (unless they put it in).