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 Ohio, 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. Ohio-based startups seeking venture capital must comply with both state and federal securities laws, such as the Ohio Securities Act and the Securities Act of 1933, which require proper registration of securities or a valid exemption for private offerings. Venture capital firms, when considering investments in Ohio, will conduct due diligence based on factors like management team strength, market size, product-market fit, and competitive landscape. Additionally, these firms must adhere to regulations that affect their operations, including the Investment Advisers Act of 1940 at the federal level, which may require registration with the Securities and Exchange Commission (SEC), depending on the size of their assets under management. It is advisable for startups and venture capital firms to consult with an attorney to ensure compliance with all relevant laws and regulations during the venture capital financing process.