FAQ

A venture capitalist (VC) is an investor who provides money to startups and growing businesses in exchange for equity (ownership). They don’t just give funds; they also bring guidance, network, and strategic support to help the business scale.

In venture capital, investors put money into a company in return for shares. If the company grows in value, the VC makes money when those shares are sold later (through acquisition, secondary sale, or IPO). Until then, they help the founders grow the business.

VCs earn when the startup’s value increases and they exit their stake at a higher price. This usually happens when the company is sold, goes public (IPO), or another investor buys their shares.

An angel investor is usually an individual investing their own money, often at very early stages. A venture capitalist typically manages a pooled fund (other people’s money), writes larger cheques, follows a structured process, and may join multiple funding rounds.

It’s usually right to approach a VC when you have a clear problem-solution fit, some proof of demand (users, customers, traction), and a plan to scale faster with capital. If your idea is too raw and you don’t know your market yet, it may be too early.

VCs typically look at the founder (clarity, commitment, execution ability), the market (big enough and growing), the product (solving a real problem), and the traction (users, revenue, or strong early signals). They want to see both potential and seriousness.

At early stages, VCs may typically take anywhere from 10% to 25% of a company, depending on the round size, valuation, and risk. The exact number always comes down to negotiation, traction, and how competitive the deal is.

Common questions include:

• What problem are you solving and for whom?

• How big is the market?

• Why are you the right team to build this?

• How will you make money?

• How will you use the funds and what milestones will you hit?

Pitches are often rejected due to unclear problem, small or unclear market, weak business model, lack of traction, or a founder who seems unprepared or unrealistic. Sometimes the startup is good but simply doesn’t fit that VC’s focus area or stage.

Not automatically. You do give up some ownership and usually some decision rights, especially at later stages. But if you structure the deal well and choose the right partner, you can keep strategic control while still leveraging outside capital.

It depends on your goals. VC is better if you want to grow fast, capture a large market, and are okay sharing ownership. Bootstrapping gives you full control but slower growth. Bank loans don’t dilute equity, but you must repay with interest regardless of business performance.

Globally, sectors like AI, SaaS, fintech, climate/greentech, healthtech, and consumer tech attract a lot of VC interest. In different regions (like India), local themes such as digital payments, B2B SaaS, logistics, agritech, and EVs are also hot.

A traditional business can attract VC if it shows strong unit economics, clear demand, and a scalable model (franchising, tech-enablement, multi-city expansion, etc.). Even if it’s non-tech, VCs look for growth potential, repeatable systems, and a strong founder.

Look for VCs who invest in your industry, ticket size, and stage (idea, seed, growth). Check their portfolio, website, LinkedIn, and previous deals, and approach those who clearly match your type of business rather than sending random mass emails.

VCs are increasingly focused on profitable growth, not just “growth at any cost.” There’s more interest in AI-powered tools, climate and sustainability, automation, and businesses with clear paths to cash flow and unit-level profitability.