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 South Dakota, venture capital financing is not governed by specific state statutes that apply exclusively to venture capital firms. Instead, venture capital firms operate under general business, securities, and investment laws that apply to various types of investment activities. These laws include regulations on securities offerings, investor qualifications, and business operations. Federal laws, such as the Securities Act of 1933 and the Securities Exchange Act of 1934, along with regulations from the Securities and Exchange Commission (SEC), also play a significant role in governing venture capital activities. These federal laws require proper registration of securities, disclosure of information to potential investors, and adherence to anti-fraud provisions. Venture capital firms in South Dakota must also consider state laws related to corporate governance and fiduciary duties when making investment decisions and managing their investments in startup companies.