BizTerm Definition
Venture Capital (2)
Full Definition

Venture Capital firms invest in private companies that need capital to develop and market their products. In return for this investment, the venture capitalists exact a price - significant ownership of the company and seats on the board of directors. For the most part, venture capitalists focus on companies in the technology, medical and retail sectors. Venture capitalists raise money from institutional investors, state pension funds and high-net worth individuals, usually in the form of partnerships. Investors should look at the venture capital firms track record and expertise when evaluating an IPO.

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