This page is for startup founders to understand their potential VC investors.

If you have the time, read these.


Entrepreneur (French) ≈ adventurer ≈ venture ≈ enterprise ≈ company.

Capital = money.

So, "venture capital" is just a fancy name for "company money".

A story

In the 1400s-1800s, companies of entrepreneurs would borrow money from adventure investors, get a large boat, employ sailors, and take long sailing trips to far distant places. When they got back they might have large loads of gold, silk, and spices worth a lot of money. The employee sailors, entrepreneurs, and the investors would all get fairly rich from the enterprise. However, there was a large chance that the boat would return with very little valuable product or sink in a storm with all of the investment lost. Even if the boat returned, it would take a long time to cash out whatever returned. Because of the high risk of total loss and the long period of time to cash out the investment, those adventure investors deserved a large share of the returns that the boat brought back for the enterprise.

Some things to know

The difference between an angel investor and VC is that

VC firms have different roles.

Most VCs interact mainly with the CEOs of startup companies. Raising money and negotiating business terms is the CEO's responsibility. As a CEO, you need to get the attention of a GP for an investment deal to happen.

Just as startups raise money from VCs, GPs raise money from LPs.

Who are these LPs? These are some examples:

What do LPs want from venture funds?

There are two general truths about investing.

LPs usually have a very large amount of money that they want to have last forever and grow steadily. They will invest most of their portfolio in relatively safe investments such as US treasury bonds, real estate, precious metals, and the public stock market. But, to get slightly better average returns, they will invest a small portion of their portfolio in high risk high return investments such as VC.

So, dear entrepreneur, of a hypothetical $100B endowments, $1B gets invested in 100 VC funds as $10M each. Each fund gathers 10 such LPs for a $100M fund, out of which comes the $1M that a VC invests in your risky enterprise. Go forth and seek as much gold, silk, and spices as you can and return quickly.