Legal Definitions - venture capital

Venture capital refers to funds that are invested in a new business venture that has a high risk but also has the potential for a high return. This type of investment is also known as risk capital.

For example, if a group of investors decides to invest in a startup company that is developing a new technology, they are providing venture capital. The investors are taking a risk because the technology may not be successful, but if it is, they could earn a significant return on their investment.

Venture capital is different from other types of funding, such as debt capital, which is raised by issuing bonds, or equity capital, which is provided by a company's owners in exchange for evidence of ownership, such as stock.