In 1976, two young men named Steve Jobs and Steve Wozniak needed money to build computers. A former Intel executive named Mike Markkula wrote a check for $250,000. That was venture capital. It is money invested in young companies with high growth potential, in exchange for equity. The investors are not banks. They do not want interest. They want a piece of the company, and they want it to grow fast.

Venture capital firms raise funds from pension funds, endowments, and wealthy individuals. They invest in startups that could return ten times the investment. Most will fail. The few winners must cover the losses. This power law shapes everything. A VC will reject a solid business that might double in value. It is not looking for solid. It is looking for explosive.

Stages of funding

• Seed: first money, often for product development.
• Series A: proven traction, scaling the team.
• Series B and beyond: expansion, new markets, acquisitions.
• Exit: IPO or acquisition, when investors get paid.

Venture capital built Silicon Valley. It also funds biotech, fintech, and clean energy. The model is not for every business. A restaurant or a consulting firm will never attract VC. That is fine. Different businesses need different money.