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Ever wondered how Venture Capital works?

Ever wondered how Venture Capital works? Well, we are here to shed some light on the process that defines Venture Capital.

๐Ÿ. ๐‚๐š๐ฉ๐ข๐ญ๐š๐ฅ ๐€๐œ๐œ๐ฎ๐ฆ๐ฎ๐ฅ๐š๐ญ๐ข๐จ๐ง โ€“ Venture Capitalists (VCs) amass funds from Limited Partners (LPs) to create a substantial capital pool.
๐Ÿ. ๐’๐ญ๐ซ๐š๐ญ๐ž๐ ๐ข๐œ ๐ˆ๐ง๐ฏ๐ž๐ฌ๐ญ๐ฆ๐ž๐ง๐ญ โ€“ VCs primarily channel these funds into nascent, high-growth potential companies that require capital infusion for expansion.
๐Ÿ‘. ๐๐ฎ๐ซ๐ญ๐ฎ๐ซ๐ข๐ง๐  ๐†๐ซ๐จ๐ฐ๐ญ๐ก โ€“ VCs donโ€™t just provide capital; they actively participate in the companyโ€™s growth. They often take up board seats, offer strategic advice, and make valuable introductions, thereby serving as advisors and mentors.
๐Ÿ’. ๐’๐ญ๐ซ๐š๐ญ๐ž๐ ๐ข๐œ ๐„๐ฑ๐ข๐ญ โ€“ After a period of approximately five to ten years, during which the company experiences significant growth, the VC divests its stake through an acquisition or an Initial Public Offering (IPO).
๐Ÿ“. ๐๐ซ๐จ๐Ÿ๐ข๐ญ ๐‘๐ž๐š๐ฅ๐ข๐ณ๐š๐ญ๐ข๐จ๐ง โ€“ The successful exit not only benefits the company but also allows VCs and LPs to reap substantial returns on their initial investment.
๐Ÿ”. ๐‚๐š๐ฉ๐ข๐ญ๐š๐ฅ ๐‘๐ž๐œ๐ฒ๐œ๐ฅ๐ข๐ง๐  โ€“ Once all investments have been liquidated and the proceeds have been distributed to the LPs, the cycle begins anew. LPs reinvest their earnings into a fresh set of funds, thus perpetuating the venture capital lifecycle.

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