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 Iowa, venture capital financing is not governed by a specific set of state statutes but is subject to general state laws that regulate securities, business entities, and contractual agreements. Iowa follows federal securities laws, such as the Securities Act of 1933 and the Securities Exchange Act of 1934, which require companies to register their securities or find an exemption before offering or selling them to investors. Venture capital firms in Iowa, as in other states, typically invest in companies in exchange for equity, and they must comply with both state and federal regulations regarding securities offerings. Additionally, the Iowa Economic Development Authority offers programs and resources that may support venture capital investments in qualifying businesses. When venture capital firms consider investing in Iowa-based companies, they evaluate the same factors as they would anywhere else, including the strength of the management team, market size, product-market fit, and competitive landscape. It is advisable for startups seeking venture capital in Iowa to consult with an attorney to ensure compliance with all relevant laws and to structure their financing rounds appropriately.