Venture capital (VC) is a type of equity capital which is typically invested into high-growth, high-potential, solid companies with the idea of generating a sizeable return via an exit strategy such as an IPO, acquisition, or merger. Typically the firm receiving the cash will give up a particular percentage of ownership to the investing entity.
The money we call venture capital will often come from institutional investors and individuals with a sizeable net worth. Their capital is pooled together by venture capital firms, who often help make the decisions as to what companies might be good investments. A venture capitalist (also known as a VC) is a person who works at a venture capital firm. Venture capitalists often bring managerial and technical knowledge, in addition to their own capital in some cases.
Venture capital can help a firm get off the ground quickly, or if already operating, to scale to new heights. Venture capital investments sometimes are poured into early-stage companies, known as seed investments, but more often they are given to companies slightly more established. Seed investments are often done by angel investors, who are more likely to invest in companies that do not have a proven track record.