It was a regular Sunday during my high school days, and I sat down to have lunch in front of the TV. What followed was an epic series of events that led me into discovering Venture Capital!
I was randomly browsing through channels as I always do, and stumbled upon a show where I heard a person say, “I am seeking $100,000 in exchange for 10% equity stake in my company”, to a panel in front of him. I put down the remote and started watching out of curiosity. I was extremely confused. Why is someone asking money from someone else on TV, and why is there an entire show based on it? But for some reason, I was hooked and ended up watching the entire episode.
After my lunch, I Googled “Shark Tank” – the name of the TV show, a fan of which I am even today – and was amazed by what popped up. I spent the next hour reading a whole lot about investments, venture capital and private equity. I learnt that the person who was pitching his company (or startup) is an entrepreneur and the panellists (or Sharks as they are called) are investors. And “Shark Tank” is essentially a place where aspiring entrepreneurs can pitch their business ideas to the Sharks, seeking investments to grow their companies.
And that kind of sums up the definition of venture capital. Startups which have a potential for long-term growth require capital to grow their businesses. Private firms or people finance such businesses by investing their capital in exchange for a stake in the startup. This capital is called venture capital and the investors are called venture capitalists.
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