risk capital, money invested in a new business or the stocks of a new business
Venture capital is a type of
private equity capital typically provided by professional, outside investors to new, growth businesses. Generally made as cash in exchange for shares in the investee company, venture capital investments are usually high risk, but offer the potential for above-average returns. A venture capitalist (VC) is a person who makes such investments. A venture capital fund is a
pooled investment vehicle (often a
limited partnership) that primarily invests the
financial capital of third-party investors in enterprises that are too risky for the standard
capital markets or
bank loans. Venture capital can also include managerial and technical expertise. Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships. This form of raising capital is popular among new companies, or ventures, with limited operating history, who cannot raise funds through a debt issue. The downside for entrepreneurs is that venture capitalists usually get a say in company decisions, in addition to a portion of the equity.
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An investment in a start-up business that is perceived to have excellent
growth prospects but does not have access to
capital markets. Type of financing sought by early-stage companies seeking to grow rapidly.
funds made available for startup firms and small businesses with exceptional growth potential. Managerial and technical expertise are often also provided; also called risk capital.
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