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What is venture capital?
Venture capital is a type of financing that investors provide to early-stage, high-potential, and start-up companies that have already grown quickly or have exponential growth potential. Investors will generally receive equity within the company and will have influence over company decisions. Those investors are referred to as venture capitalists. Venture capitalists can come in the form of accredited investors, wealthy investors, investments banks, financial institutions, and, in some cases, angel investors. Companies will generally seek venture capital as a way sustain growth and not disrupt cash flow. Should a company seek a more traditional route of acquiring funds from a loan or debt financing, that company will have to pay back the loan as well as interest, which ultimately is a loss in earnings. Examples of companies that sought venture capital are Amazon, Apple, and Facebook.
Why do I need legal guidance on venture capital?
Venture capital generally involves a large sum investment from a venture capitalist, often legal counsel is sought after by the venture capitalist as well as the companies seeking capital. Venture capital legal counsel covers a wide range of legal and business matters like contractual agreements, venture fund structures, intellectual property protection, policy work, employment laws, securities laws, tax regulations, market insights, and much more. A venture capitalist lawyer will regularly work will have clients on either side of the equation advising both venture capitalists and early-stage, high-potential, and start-up companies on how to establish and operate effectively within venture capital opportunities.