Venture capital (VC) is a form of institutional investment where funds raise money from limited partners (pension funds, endowments, family offices) and deploy it into early-stage, high-growth private companies in exchange for equity. VCs expect most investments to fail but count on a few outsized wins to make the portfolio worthwhile.
VC funding rounds
VCs participate across rounds: Seed, Series A, Series B, and beyond — each at higher valuations and with more institutional governance.
Why it matters for unlisted shares
VC presence in a cap table is a meaningful signal: the company passed institutional due diligence and has professional board oversight. Marquee VCs (Sequoia, Accel, Peak XV, Lightspeed, Nexus) lend credibility to both the business and the last-round valuation.
However, VCs hold preferred shares with liquidation preferences and often ROFR rights — understand what these terms mean for ordinary-equity holders before buying alongside them.
Example: A company backed by two top-tier VCs at Series B listed at 3× the Series B price. VC discipline in governance and exit timing contributed to the strong listing.