Venture Capital (VC)
A form of private equity financing where funds invest in early-stage companies with high growth potential in exchange for equity.
Returns are driven by a small number of outsized winners — the power law distribution means the top 10-20% of investments often generate the majority of fund returns. VC is characterized by illiquidity, long hold periods (7-12 years), and high failure rates among portfolio companies.
For institutional allocators, VC offers asymmetric return potential but requires careful manager selection — the dispersion between top and bottom quartile VC managers is the widest in all of private markets, exceeding 15-20% annually.
How Octum helps
Venture-backed companies and their investors are active on Octum — using Ora for company analysis, Investor Discovery for LP matching, and Community Intelligence for market signals.
Frequently Asked Questions
What is venture capital?
Venture capital is private equity financing for early-stage, high-growth companies. Returns follow a power law — a small number of outsized winners generate the majority of fund returns.
Why is manager selection critical in venture capital?
The performance gap between top and bottom quartile VC managers exceeds 15-20% annually — the widest dispersion in private markets. Selecting the right manager is the primary determinant of VC returns.
How long does a typical VC investment last?
VC fund lives are typically 7-12 years, with companies held for 5-10 years before exit through IPO, acquisition, or secondary sale. This illiquidity is a key consideration for institutional allocators.
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