Definition
Venture capital (VC) is a form of financing in which professional investment firms put money into early-stage companies that have high growth potential — and a high risk of failure — in exchange for equity, often entering at stages such as seed, Series A or Series B.
Meaning and usage
VC funds raise money from their own investors, and the large returns of a few successful portfolio companies are expected to cover the many that fail, which is why the model favors markets and teams that can grow exponentially. Founders sell equity, and investors often bring networks and advice along with the capital.
Usage
VC comes up in startup fundraising, and in discussions of dilution, valuation and exits through IPOs or acquisitions. Tech press funding stories routinely note which firm “led the round”.
Related and confusable terms
A VC check does not mean the product has PMF — the investment is a bet on future growth — and it does not guarantee that ARR keeps climbing. Venture capital is only one form of equity financing, distinct from bootstrapping a company on its own revenue.