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 Virginia, venture capital financing is governed by a combination of state statutes and federal securities laws. State regulations, under the Virginia Securities Act, oversee the registration and oversight of securities offerings, which includes investments made by venture capital firms. These regulations are designed to protect investors and ensure fair practices in the market. Additionally, federal laws, such as the Securities Act of 1933 and the Securities Exchange Act of 1934, as well as regulations from the Securities and Exchange Commission (SEC), provide a framework for the offering and sale of securities to protect investors against fraud. Venture capital firms must comply with these regulations when raising funds and investing in companies. Factors such as the strength of the management team, market size, product-market fit, and competitive landscape are critical in venture capital firms' due diligence processes, but these are not regulated by law; rather, they are part of the business judgment and risk assessment venture capital firms undertake before investing.