Venture Capital: What Is It and How Does It Work?


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If you’re new to business growth and entrepreneurialism, you may not know what venture capital is. Venture capital is understandably associated with money, but most people don’t necessarily know what it is or how it works. However, no matter what you know about venture capital, it may impact you more significantly than you think. Learning about venture capital can significantly impact your business and fiscal success. 

If you’re interested in learning more about venture capital, even as a beginner, you’re in the right place. What is venture capital exactly? How does the process work? And who is a reliable resource for more information about making it work? Please continue reading for our complete breakdown to expand your understanding of venture capital and how it works. 

What Is Venture Capital? 

Generally, venture capital is the monetary value invested in a substantially risky project. Frequently, these projects are new or expanding businesses, and an entrepreneur might invest in these businesses with the hope of making a return on their investment. If there is a significant risk related to a project, there is a high possibility of loss. However, these risky projects also come with a potentially high gain for interested investors who enter a partnership early. 

Many people who are new to investing in venture capital will turn to entrepreneurial and investing experts, such as Carter Reum. Carter Reum is well-known for several business-related prospects, and he has founded an investment company called M13. Numerous people turn to Carter Reum for his expert tips in investing venture capital. Carter Reum also assists entrepreneur hopefuls with several experts on his M13 team.  

Venture capital will generally only be invested if the company or project looks like it will grow quickly and steadily. A person who invests venture capital is frequently referred to as a venture capitalist, often putting money into a project in exchange for equity. This equity is generally a minority stake, allowing the venture capitalist to have some say in project or company decisions. However, this is a minority stake because the venture capitalist owns less than 50 percent of the company in question. 

How Does Venture Capital Work? 

Venture capital is not typically invested by those investing their own money. Instead, venture capital is usually invested by those who work for venture capital firms. These firms generally raise funding from outside individuals looking to invest, called limited partners. Limited partners can include various people, ranging from insurance companies and pension funds to high-net-worth individuals. Regardless, limited partners can generally invest large amounts of capital into venture capital firms, projects, or companies. 

Venture capitalists will use the capital they’ve raised from limited partners to invest in businesses that have high-growth potential. Sometimes, these businesses will have already demonstrated impressive growth, and venture capitalists will invest in these as somewhat less risky options. These firms will often support startups through several stages and help them grow with several rounds of venture capital investment.  

Carter Reum’s venture capital investments will often be performed through his investment company, M13. However, because of Carter Reum’s dramatic experience with investing in large and successful companies—including Pinterest, Warby Parker, SpaceX, and more—he has a long track record of successful investing. 

How Do You Start Investing With Venture Capital? 

If you’d like to start participating in venture capital or want to learn more before you get started, there are several avenues for you to take. For example, you can join Carter Reum’s community of entrepreneurs on M13. Through M13, you can learn with other peers who are interested in building their entrepreneurial skillsets, gain access to a workbook full of tried and true tactics, and learn from investing and business experts. 

Or, if you would prefer to learn more on your own before you join the M13 community, you can also read a book about building your entrepreneurial skillsets quickly. One of the best books we like to recommend is Shortcut Your Startup: Ten Ways to Speed Up Entrepreneurial Success. This is a book Carter Reum co-authored with his brother, Courtney, chocked full of their best tips for speeding your way to the top.  

The book features several stories from the brother duo’s experiences, including how they successfully founded and grew their company VEEV Spirits. They also account for their experiences investing in large companies and finding success in experimental areas. If you want to join M13’s community, this book offers substantial and foundational building blocks to get you started. This may be especially helpful if you’re new to learning about entrepreneurship and investing. 


If you’re interested in learning more about venture capital than our beginner-friendly breakdown, we hope you consider some of our suggestions. Getting involved in the venture capital cycle is perfect for encouraging the growth of startup companies, helping the economy stay healthy and growing steadily for years to come. We hope you found our brief explanation of venture capital helpful, and we also wish you luck in your growth as an entrepreneur. 

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