Venture capital financing (also known as venture capital funding or VC funding) is a form of financing for new or early-stage companies with high growth potential. Venture capital financing is offered by venture capital firms, which are professional investment firms that receive investment money from state pension funds, university endowment funds, and wealthy individuals. Venture capital firms seek multiple returns on their initial investment in a startup company. When evaluating companies to invest in, venture capital firms consider many factors, including (1) the strength of the management team; (2) the size of the market the company is in (total addressable market or TAM); (3) whether the company has proven there is demand in the market for its product or service (product-market fit); and (4) how easy or difficult it will be for other companies to compete with the company seeking venture capital financing.

In Colorado, venture capital financing is governed by a combination of state statutes and federal securities laws. State regulations, primarily under the Colorado Securities Act, oversee the registration and anti-fraud provisions concerning the offer and sale of securities within the state. Additionally, venture capital firms and transactions often fall under the purview of federal laws, such as the Securities Act of 1933 and the Securities Exchange Act of 1934, which require registration of securities and disclosure of information to investors, unless an exemption applies. The Dodd-Frank Wall Street Reform and Consumer Protection Act also plays a role in regulating venture capital advisors. Colorado does not have specific statutes tailored exclusively to venture capital, but general business, securities, and contract laws apply to venture capital transactions. Factors such as the strength of the management team, market size, product-market fit, and competitive landscape are key considerations for venture capital firms when making investment decisions, but these are not regulated by law; rather, they are part of the due diligence process that venture capital firms undertake to assess potential investments.