The term venture capital refers to the process of raising funds from an external investor in exchange for the acquisition of shares or stocks in a company for a limited period of time. In the last decade of the previous century, a field for the creation of completely new financing techniques emerged, aimed at young entrepreneurs with an idea for a business. One of the possibilities for providing businesses with capital turns out to be the venture capital fund. The new term we will try to introduce is crypto venture capital funds. VCs have become an important source of funding for new innovation, but also a source of future income for companies that invest in digital assets and blockchain companies, providing investors with a full spectrum of exposure to the space. Crypto funds are not new to the virtual digital currency market. Until recently, they were not very popular, but recently their popularity has increased significantly. This phenomenon concerns both individuals and large financial institutions.
Popular types of investment
These include crypto venture capital funds or equity exposure in companies creating products and services in the emerging blockchain ecosystem. Firms with years of experience can see virtually every transaction in the market and lead about half of the investments in our portfolio companies. The aim of venture capitalists is to increase the market value of a company, as this is in their economic interest. Another type of investment is exposure to the largest and most liquid digital assets. Using market and technical expertise to trade tokens while exploiting market inefficiencies.
Phases of the venture funding process
The supply of funds provided by VCs to companies can take place at basically any phase of their development. However, the earlier the phase is, the higher the risk for the investor. On the other hand, there is a lower cost of entry, as the capital borrowers must offer favourable conditions for the acquisition of their shares in order to attract as many investors as possible. The first stage of an entity’s development is referred to as seed investment, where capital is injected while research and development are still underway to prepare prototypes. The next stage is usually the creation of a start-up. The third phase occurs when the market accepts a sample batch of goods or services. In this case, the risk decreases because it is easier to estimate the chances of the product’s success on the market