This summary from vnpartners.com provides a good overview of the venture capital financing process, answering questions such as:
What is “venture capital”?
What is “seed money”?
What is “start-up capital”?
What are later stage financings?
Why would these later stages be necessary?
Is there a way to avoid later-stage financings?
What is an “IPO”?
Aren’t founders’ shares and private placement stock subject to restrictions on transfer? If so, how then do the founders and investors cash out?
Who invests in start-ups?
Aren’t there securities laws concerning investor solicitations?
Don’t you have to register your offering with the SEC?
How much money is available for investment in venture capital situations?
What type of return do venture investors require?
What types of returns are possible?
What else do investors expect?
How important is the offering circular or private placement memorandum?
What are the most important elements of the offering circular?