The succinct answer is yes, VC funding massively helps many startups to achieve their growth and revenue goals. In fact, it has been proven multiple times in studies to have a huge positive impact on startups and their long-term success. The factors that contribute to the success of startups include network effects, capital, expertise / strategy and more.
However, it should be noted that venture capital financing is not the optimal route for every startup. In fact, only a fraction of startups receive venture capital financing and have the need to. VC financing only works for a niche set of companies that are enabled by technology and disruptive by nature.
This financing works due to the scalability of said technologies and the need for quick growth upon finding product-market fit. Since said companies are highly scalable, they need to expand around the world to become market leaders. Therefore, venture capitalists prefer growth over short-term profits and are willing to invest huge sums to actualize this.
This model however does not work for traditional companies. Whereas most companies need physical locations, tangible inventories, and infrastructure, software companies do not. Though it is expensive to develop, software is much cheaper to scale. This is where the experience of the venture capitalists can add incredible value. A VCs expertise in a sector and wisdom in the process of scaling, enable companies to quickly grow and expand, allowing them to capture a vast market share.
When compared with similar companies that were not backed by VC, it is shown that the expertise of the VCs massively helps founders in multiple other vectors such as patent production which is shared in the article below.
Click here to read more on the strategy of VCs and how it can help scale your business.
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