Venture capital is a form of investment in new, small, risky enterprises required to get them started by specialists called venture capitalists. Venture capitalists are therefore investment specialists who raise pools of capital to fund new ventures which are likely to become public corporations in return for an ownership interest. They buy part of the stock of the company at a low price in anticipation that when the company goes public, they would sell the shares at a higher price and therefore make a considerably high profit.

 Venture capitalists also provide managerial skills to the firm. Example of venture capitalists are pension funds, wealthy individuals, insurance companies etc.

 Since the goal of venture capitalists is to make quick profits, they will invest only in firms with a potential for rapid growth.