Venture Capital Fund
In venture capital terminology, the term Venture Capital Fund refers to a fund made up of pooled investment capital that generally comes from third party investors such as banks and wealthy individuals. A Venture Capital Fund will then use this capital for the purpose of investing in start-ups and small business with exceptional growth potential.
For example, a Venture Capital Fund might invest in a company that wishes to expand its market share through a new or better product when the company is unable to obtain loans from the usual sources because of either not having a proven track record, the collateral to secure a bank loan or because it is already substantially in debt. The Venture Capital Fund probably has the resources to provide the company with the funds it requires in exchange for a certain amount of equity in the company. In addition, the Venture Capital Fund may also provide the company with management consultation and other assistance the company might need in order to improve its profitability.