Venture capital (VC) is a form of private equity financing provided by firms or funds to startups and emerging companies with high growth potential. In exchange, VCs receive equity (ownership) in the company. If the startup succeeds and is eventually acquired or goes public via IPO, the VC firm earns a return on their investment.
VC has been one of the primary wealth-creation mechanisms in the technology era. Early investors in companies like Google, Facebook, Uber, and Airbnb generated returns of 100x–1000x. Many tech billionaires built their fortunes through VC-backed startups, either as founders or as early-stage investors.
Top VC firms include Sequoia Capital, Andreessen Horowitz (a16z), Kleiner Perkins, and Benchmark.