The Role Of Venture Capital Firms In Funding Startups

Abstract

This research paper aims to provide theoretical foundations on the mechanism of Venture Capital Firms and highlight its importance in supporting startups. It was found that venture capital is the most effective means of supporting startups. The relationship between the investor and the startup owner is based on a partnership that involves sharing risks during the establishment and growth phases and reaping profits if the project succeeds. Therefore, Venture Capital Firms can be a source of financing for startups and is the most suitable mechanism to activate the role of startups, which suffer from underutilization due to their high risk.