Venture capital

Venture capital (VC) is a form of private equity specialised in financing high-growth startups and innovative companies, characterised by high risk and limited liquidity. VC funds invest sequentially across development stages (pre-seed, seed, Series A/B/C), providing not only capital but also strategic support, networks and sector expertise. In return for minority stakes in preferred shares with contractual protections (liquidation preference, anti-dilution), they target 10–25x returns on winners that compensate for a high rate of total losses. Startup valuation in VC uses stage-specific methods adapted to the absence of financial history.

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Example: a Swiss medtech VC fund invests CHF 3.0 million in a Series A for a Lausanne-based diagnostic startup — receiving preferred shares representing 25% post-money (CHF 12.0 million post-money valuation) with a 1x non-participating liquidation preference. Beyond capital, the fund provides introductions to European medical KOLs and CE marking strategy support. The fund targets a 20% portfolio IRR, knowing that 2–3 investments will drive the majority of returns across a diversified portfolio of 12–15 companies.

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Hectelion supports startups in VC fundraising — from pre-money valuation to shareholders' agreement term negotiation — and advises VC funds on portfolio company valuations and exit strategies.