So How, Exactly, Does Venture Capital Work?


Well, who better to explain than two PhDs and the founder of a venture capital limited partnership?


A fine analogy is made about the venture capital landscape: it’s like an ecosystem: all of the parts rely on one another for survival.

General partners and limited partners “are in the business of selecting talent.” They need to select the best talent to have the best return on the investment possible for all those who invested. If this doesn’t happen, the VC firm will have a short lifespan.

The entrepreneur needs money from the managing and limited partners in order to make his or her idea work to its fullest potential so that the investors have a solid ROI. Simply put: you scratch my back, I scratch yours.

It isn’t only the money that makes the difference., Insights into the industry, experience and foreseeing market trends can be just as, if not more, important.

Take a moment to watch and see how the ecosystem of venture capital works in this two-part video.

Bryan Roberts, Ph.D. — Partner with Venrock, a leading venture capital firm

Judith Elsea — Co-Founder and Managing Director of Weathergage Capital, a fund-of-funds and limited partner in venture capital investing

John Mendlein, Ph.D. — Chairman of Fate Therapeutics, an emerging company backed by venture funding.

Michael Hanewich – Moderator and Head of Silicon Valley Bank’s Life Sciences East practice.

Take a look at the video from our friends at Silicon Valley Bank.

About the author: Alexander Maykowski

Alexander Maykowski is a recent graduate of Marquette University, where he studied journalism and political science. He has an ardent interest in cryptocurrencies (such as Bitcoin) and how they will shape the financial and global landscape in the future.

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