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 Wisconsin, venture capital financing is governed by a combination of state statutes and federal securities laws. State statutes provide the legal framework for the creation and operation of venture capital firms, including the Wisconsin Uniform Securities Law, which regulates the offer and sale of securities within the state. This law requires proper registration and disclosure to protect investors and ensure transparency in the investment process. Additionally, Wisconsin has specific programs like the Badger Fund of Funds, which is a limited partnership that invests in Wisconsin-based venture capital funds with the aim of fostering new and emerging companies in the state. On the federal level, the U.S. Securities and Exchange Commission (SEC) oversees venture capital firms, particularly in terms of compliance with the Investment Advisers Act of 1940 and the Securities Act of 1933, which mandate registration, reporting, and anti-fraud provisions. These laws collectively ensure that venture capital firms operate within a regulated environment that balances the interests of investors, entrepreneurs, and the broader economy. When venture capital firms evaluate potential investments in Wisconsin, they must also consider these regulatory aspects alongside the business factors such as management team strength, market size, product-market fit, and competitive landscape.