At what stage in a startup does a Venture Capitalist get involved?

Typically A and on.

What does that mean? To accurately answer the question, we really need to define a few things.

  • Venture Capitalist : the person who manages other’s capital in a venture fund.
  • Angel : the individual who invests their own wealth directly into ventures

Important distinction. Many say “VC” and mean it to refer to anyone investing in startups, and that’s generally acceptable because it’s technically correct (capitalist in ventures) but not really accurate. Venture Capitalist works for a Venture Capital firm. If they’re not working for a fund, they’re a business investor, Angel, or other such distinction.

So the question asks, when do those VC Funds typically invest?

Let’s be clear about “stages” as they also get used a little loosely:

  • Friends, Family, and Fools – this is the initial investment to start something. That’s the first stage
  • Seed Stage – You’ve sufficiently proven an opportunity exists and are ready to really build it. Angel investors get involved because your venture is still incredibly high risk and you need industry experienced investor who genuinely want to help and see your success.
  • Series A – You’re in market. You’ve developed your business such that you’ve moved on to figuring out Market validation: how to scale and compete. This is when you start focusing on growth. VCs get involved. Time to figure out how to really monetize.
  • Series B, C, etc. – investment to get into new markets, pivot, add major changes, or look at acquisitions. Still VC
  • C and on – Private Equity looks more to get involved as you get to the stage where you’re talking terms of massive capital investments and/or going public

Of course, all of that is fudgy but generally, that’s how it works.

All that said, you should be identifying and talking to the VCs right for what you’re doing, now. Yesterday even.

Don’t wait to talk to investors until you think you’re ready! That’s too late. They WANT you to get to the point pertinent to them so they’ll advise and guide you along the way so you might better become that opportunity they want.