Financing is a critical component for entrepreneurial ventures. However, it does not replace having a solid and sustainable business model or a clear growth strategy. Beyond funding, venture capital firms provide entrepreneurial ventures with strategic input as well as links into networks important for developing the business.

Venture capital is a very valuable but specific financing tool. It is not for all start-ups, but primarily for ones with a global scalable growth strategy. Usually these are companies with a unique underlying science or technology proposition. In addition, for venture capital to function efficiently, a certain level of infrastructure needs to be in place, including exit markets (whether through mergers or via IPOs on a stock market).

Financing is not just about funding. It is about people (capabilities, motivations and incentives), the entrepreneurial opportunity, the structure of the financing agreement and the context in which all of this takes place. While the venture capital model has expanded across developed countries this past decade, there has also been a growing movement in developing and other countries to move beyond microfinance into social venture financing.