# How VCs operate Venture Capital firms typically source their funding from large investment institutions like superannuation funds or banks. * Typical investments are up to a period of 10 years * To compensate for long-term commitment/risk investors expect very high returns on investments * VCs invest in projects with high growth potential or companies which have the ability to quickly generate cash flow * VCs exit investment through company listing on the stock exchange, selling to a trade buyer or a management buyout Income: * Venture Capitalists receive a return on their investment through fees * Some return through dividends * Largest return through selling their shares in a company (capital gains) #### Investment process * Initial review of proposals from a startup * Preliminary screening (pitch) * Negotiating investment (contract) * Approving the investment (equity company, ongoing support, may receive dividends) * Sale (selling equity in the company) How Venture Capitalists work