Betsy Flanagan of Startup Studio interviews venture capitalist David Hornik of August Capital and the creator of VentureBlog.

Betsy Flanagan: David, it's so great to have you. Thank you for joining us.

David Hornik: Alright. Thanks very much.

Betsy Flanagan: So let's start right off and talk about what type of company should seek VC funding.

David Hornik: Sure. Well, I think before you could even get there, you sort of have to understand what is venture capital and how it works. I mean, venture capital is a particular kind of investment. Venture capitalists have investors themselves and they tend to be institutions, big institutions. For us it's folks like Ford Foundation or Yale University. And they invest money in our fund and then we look for interesting opportunities in which to invest and make a return for them.

And so when you consider that--and then you also consider the typical venture firm manages a pretty large amount of money--then it has an impact on who are the likely candidates for venture capital. So venture capital is well suited for high-growth, ultimately very large businesses. For example, I invest in the technology sector. We invest in information technology, maybe a microprocessor company or a software company or a services company that is supported by technology. And ultimately then, the companies that we are looking for are the companies that have the opportunity to be very big, differentiated companies.