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 New Jersey, venture capital financing is governed by a combination of state statutes and federal securities laws. State regulations, under the New Jersey Uniform Securities Law, oversee the registration and operation of venture capital firms within the state, ensuring compliance with investment practices and protection of investors. Additionally, venture capital firms must adhere to federal regulations, such as those enforced by the Securities and Exchange Commission (SEC), including the Securities Act of 1933 and the Securities Exchange Act of 1934, which govern the offer and sale of securities to protect investors against fraud. When venture capital firms invest in startups, they must also consider regulations pertaining to accredited investors and exemptions under Regulation D, which allows certain private placements without SEC registration. It's important for venture capital firms and startups to consult with an attorney to navigate these complex regulations and ensure compliance during the fundraising process.