Bob Fraser from Aspen Funds explains how venture capital works: VCs take minority ownership and a board seat, not control. Companies progress through stages from seed, where founders have just an idea, to pre-IPO, with valuations and capital amounts rising as risk falls.
So it's minority ownership. So the idea is a venture capital investor generally does not take over the company. They just simply add a board seat. Um, usually there's multiple rounds within this early stage. There's actually different, different, uh, different stage of venture capital. You have venture capital that left seed stage, which is literally two guys and an idea, you know, all the way to really mezzanine stage or pre-IPO stage. And it's all considered venture capital. And, and they invest different amounts of money. Um, it usually gets larger over time at higher valuations, but less risk.
