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 Rhode Island, 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. The Rhode Island Securities Act, which mirrors federal securities laws to some extent, regulates the offer and sale of securities within the state to protect investors from fraud. Companies seeking venture capital must comply with these regulations when offering equity to investors. Additionally, the Rhode Island Business Corporation Act provides the legal framework for the formation, operation, and dissolution of corporations in the state, which is relevant for startups and companies engaging with venture capital firms. Venture capital firms, when considering investment in Rhode Island-based companies, will evaluate the company's potential in accordance with their investment criteria, which typically includes the strength of the management team, market size, product-market fit, and competitive landscape. It is advisable for companies seeking venture capital to consult with an attorney to ensure compliance with all applicable laws and to assist in negotiations and structuring the investment.