Venture capital is capital provided by investors to start-up firms with high long-term growth potential in order to facilitate the launch, early development or expansion of the business. A venture capitalist makes money by owning an equity stake of the companies it invests in.
VC investments are of higher risk and have a higher rate of return than traditional investments. Generally investments are made into disruptive technologies, such as biotechnology, IT, software, etc. Therefore, all venture capital is a form of private equity, but not all private equity is venture capital (see private equity).