Venture Capital
Definition
Venture capital is a form of private equity financing provided to startups and small businesses with long-term growth potential.
This funding is typically offered in exchange for an equity stake in the company. Venture capital firms invest in businesses that are often in their early stages, have innovative products or services, and a scalable business model, but may lack the established revenue or assets to secure traditional bank loans. The investors aim to achieve a significant return on their investment through a future sale of the company or an initial public offering.
For example, a promising technology company seeking to expand its operations might secure venture capital funding.
This term is commonly encountered in discussions about entrepreneurship, startup ecosystems, and the financial technology sector.