venture capital fund


Venture Capital Fund

A pool of funds from investors that exists to provide funding for a start-up. For example, suppose a company with little access to capital is attempting to open a new market or access an old one with a better product. It may not be able to receive loans, either because of an unproven track record or because it is already significantly in debt, and it may have exhausted financing from family and friends. Venture capital funds allow this company to begin and build upon its operations by providing necessary funding. Usually, the provider of venture capital funds takes equity in the company in exchange for the money. Venture capital firms may also provide needed expertise in how to run a business than can help the start-up become successful. Venture capital funds are considered high risk investments, but have the potential for a high return.

venture capital fund

An investment company that invests its shareholders' money in new, very risky, but potentially very profitable, business ventures. See also nondiversified management company.