Venture capital is a form of private equity financing provided by investors to startups and small businesses with high growth potential. Venture capitalists supply funding in exchange for equity, or partial ownership, in the company. This investment helps young companies develop products, scale operations, and enter markets. Venture capital is crucial for innovative businesses that may not qualify for traditional bank loans due to limited operating history or collateral. In addition to funding, venture capitalists often offer strategic guidance and industry connections to help companies succeed.