Venture capital is a subclass wide range of private equity , which refers to making an investment in the stock , and usually in small companies , for early development , or expansion in business activity . In the investments contain risk , is the application of new technology , and new concepts of marketing and new products have not been verified .

And divides the Venture capital often on the stages of development of the company starting from the capital at an early stage and Oatstkhaddm of start-up companies to late stage and growth capital that is often used to finance the expansion of an existing business that is generating income and may not be profitable or generate cash flow to fund future growth .

And develop business products and ideas that need to be capital essential in the early stages of plastic from the life cycles of companies . , And many entrepreneurs do not have enough funds to finance the project itself , and therefore must search for external funding and Venture capitalist in the need to achieve high returns to compensate for the risk these investments , which makes the project a funding source of capital for companies . The Venture capital is the most convenient for business with large requirements for capital that can not be financed by cheaper alternatives such as debt . And despite the fact that Venture capital is often more closely related to the legitimacy of technology and growth areas of biotechnology , it uses some of the traditional business .