For decades now, venture capitalists have played a crucial role in the economy by financing high-growth start-ups. While the companies they've backed--Amazon, Apple, Facebook, Google, and more--are constantly in the headlines, very little is known about what VCs actually do and how they create value. To pull the curtain back, Paul Gompers of Harvard Business School, Will Gornall of the UBC Sauder School of Business, Steven N. Kaplan of the University of Chicago Booth School of Business, and Ilya A. Strebulaev of Stanford Business School conducted what is perhaps the most comprehensive survey of VC firms to date. In this article, they share their findings, offering details on how VCs hunt for deals, assess and winnow down opportunities, add value to portfolio companies, structure agreements with founders, and operate their own firms. These insights into VC practices can be helpful to entrepreneurs who want to raise capital, corporate investment arms that want to emulate venture capitalists' success, and policy makers who seek to build entrepreneurial ecosystems in their communities.

This note describes the tasks that fill the working day of a venture capitalist. Those functions involved in investing (deal sourcing, due diligence, and related tasks) often receive the most attention from students. However, interviews with experienced venture capitalists found that as much or more time is spent working with existing portfolio companies. This note provides insight into each aspect of a venture capitalist's job: making investments, working with portfolio companies, and managing the venture capital firm as a business. The note is written heavily based on quotes, allowing experienced venture capitalists to describe their activities in their own words.

The case profiles the protagonist, Vineet Rai, managing partner of Aavishkaar Venture Management Services (an Indian, early stage VC firm with a focus on rural, underserved regions and sectors), as he initially formulates the concept for the Aavishkaar, and seeks to initially capitalize the fund. The case follows Rai through his ongoing struggles and perseverance for capital, after which it discusses the thesis, structure, and nuances of the fund. It then shines the light on a prospective investment by the fund in an Indian dairy company, Milk Mantra, and deliberates whether the specific investment is a prudent one at that moment in the fund's life. It is recommended that this case be taught in conjunction with the GSB's "Note on Angel Investing and Venture Capital in India.

The case profiles the protagonist, Vineet Rai, managing partner of Aavishkaar Venture Management Services (an Indian, early stage VC firm with a focus on rural, underserved regions and sectors), as he seeks to build on the initial traction of his first venture fund and strives to raise a second, larger, and more ambitious fund. The case discusses Rai's "lessons learned" from his first fund (profiled in Case A), and discusses how such lessons have informed a changed approach to the Aavishkaar thesis and fund structure. It also provides a series of snapshots from prospective LPs in the fund being raised.

The case profiles the protagonist, Vineet Rai, managing partner of Aavishkaar Venture Management Services (an Indian, early stage VC firm with a focus on rural, underserved regions and sectors), as he debates whether to make a follow-on investment in a portfolio company, Milk Mantra. The case provides an update on Aavishkaar's fundraising efforts to date (updating Case B), and then provides an overview of the events at Milk Mantra since Aavishkaar's first investment (profiled in Case A). Given that progress at Milk Mantra is a mixed bag, the case raises the question as to whether it's worthwhile for Aavishkaar to increase its investment in and exposure to Milk Mantra.

When entrepreneurs are successful in convincing venture capital firms that they are an attractive potential investment, they are presented with offers detailing many terms of the investment agreement. These are described in term sheets. Sorting through the myriad terms can be a daunting proposition for an entrepreneur. Yet, it is important for entrepreneurs to understand the terms of a proposed financing. These determine the payout the entrepreneurs will receive when the company is liquidated or sold (either to another company or to the public through and IPO), the dilution the entrepreneurs will suffer in the event of a future down round of financing, control of the board of directors, and other important matters. The Series A terms will also set a precedent for the terms of future financing rounds. This case presents a situation in which entrepreneurs receive term sheets from two venture capital firms. The two term sheets differ in many ways, and students are asked to evaluate them from the perspective of the entrepreneur.

Most venture capital profits come from a small percentage of investments, despite high expectations for each investment made. As a result, a small improvement in selecting portfolio companies can make a substantial improvement in fund results. This case describes the venture capital deal sourcing and screening process. It does not describe the due diligence process in detail, but focuses on initial screening-identifying those companies that the venture capitalist will evaluate in more detail. After describing the sourcing and screening process, the case describes a fictional venture capital firm, and provides a number of incoming investment opportunities to be evaluated. Students are asked to play the role of an associate at the firm, and tasked with reviewing these opportunities and determine how each should be handled-should they be rejected, should they contact the entrepreneur for more information, or should they refer the opportunity to one of the firm's partners.