Venture Capital investments provide funds for start-up companies to get off the ground. They are regarded as high-risk but also potentially very lucrative. In return for providing the initial funding venture capital investors often receive a stake in the company. If the company succeeds, that small initial stake can massively multiply in value years later. Of course, most new companies do not succeed, but venture capital investors live in hope that the few great successes will more than outweigh the many failures they experience.

Venture Capital investors can be either institutions or wealthy individuals. Companies which specialize in venture capital investment do exist. To secure funding, the managers of the proposed new business would usually have to present a business plan to potential investors, as well as perhaps being interviewed by them, or offering them a presentation of what it is that makes their business distinctive.

Venture capital investment is seen as highly speculative in nature because usually the only form of collateral the borrowers can offer comes in the form of shares in their own company. Initially, of course, those shares are usually worthless. It is only through the potential success of the investment that they can take on significant value.