There is an extremely interesting entry in a blog called a “A VC”, written by Fred Wilson, managing partner of a small venture capital firm called Union Square partners. It has a particularly clear description and example of the financial mechanics of the venture business, which any software start-up entrepreneur should understand thoroughly before they raise money. The blog is worth reading, though Mr Wilson has an eccentric style which includes his views on popular music interspersed with his venture capital experiences.

For a more in-depth view I strongly recommend the book Smarter Ventures by ex-journalist Katherine Campbell, now herself in the private equity business.