A Venture capital is another method of financing in the form of equity participation. A venture capitalist finances a project based on the potentialities of a new innovative project. It is a contrast based on conventional “security based financing”. Much thrust is given to new ideas or technological innovations. Finance is being provided not only for ‘start up’ but also for ‘development capital’ by the financial intermediary.
Venture capital (VC) is funding invested, or available for investment, in an enterprise that offers the probability of profit along with the possibility of loss. Indeed, venture capital was once also known as risk capital, but that term has fallen out of usage, probably because investors don't like to see the words "risk" and "capital" in close conjunction.
In other Words Venture Capital is Financing for new businesses, or money provided by investors to startup firms and small businesses with perceived, long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns.
