Short definition: Venture capital (VC) is a form of private equity financing provided to early-stage, high-growth potential companies.
Explanation: Venture capital firms or funds invest in startups and emerging companies that are deemed to have significant growth potential but may also carry higher risks. These investments are typically made in exchange for equity ownership in the company. Venture capitalists provide not only financial support but also mentorship, industry expertise, and networking opportunities to help these companies grow and succeed.
Example: A venture capital firm might invest in a technology startup developing a new software product with the potential to disrupt the market.
Additional information (optional): Venture capital investments are typically illiquid and long-term, with investors often expecting to exit their investments through an initial public offering (IPO) or acquisition. Venture capital plays a crucial role in fostering innovation and driving economic growth by providing funding and support to promising startups.