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Venture capital is form of business financing. It generally takes the form of a cash investment in exchange for shares in the company. Venture capitalists may also contribute managerial and technical expertise and indeed most venture capitalists require a large say in the running of the business as a condition of the advancement of the venture capital. Venture capital is most often sought by new start-up companies that do not have access to traditional capital markets or sources of finance as they have a limited operating history or are otherwise considered to be risky. Due to the nature of the companies invested in, venture capital is usually invested after detailed analysis convinces the venture capitalist that the company in question has substantial profit potential within a relatively short timeframe, typically 3-7 years. Venture capitalists are usually institutional investors or wealthy individuals.

In developing countries, venture capital has become more important to small and medium sized companies that would not readily qualify for traditional bank loans.