Venture Capital
Definition
A form of private equity financing provided to early-stage and growth-stage companies with high growth potential in exchange for equity. Venture capital investors typically seek returns through a liquidity event, most commonly an acquisition or an initial public offering, and require a return multiple sufficient to compensate for the high risk of early-stage investment across a portfolio of companies. Venture capital financial due diligence is defined in the FFI Standard investor expectations matrix under the Seed Institutional and Series A categories.
Common Misapplication
The most common misapplication is treating venture capital investment terms as equivalent to traditional equity investment. Venture capital investment typically involves preference share structures, information rights, board representation, and pro-rata rights that do not apply to most other forms of equity investment and must be modeled accordingly.
FFI Standard Reference
This term is defined and applied in Book 5, Section 5.3: The Investor Expectations Matrix.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Venture Capital. https://ffistandard.org/glossary/venture-capital/. 2026.