What is venture capital financing? Briefly describe its characteristics.

The venture capital financing refers to financing of new high risky venture promoted by qualified entrepreneurs who lack experience and funds to give shape to their ideas. In broad sense, under venture capital financing, venture capitalist make investment to purchase equity or debt securities from inexperienced entrepreneurs who undertake highly risky ventures with potential to succeed in future. Some of the characteristics of Venture Capital financing are: (i) It is basically an equity finance in new companies. (ii) It can be viewed as a long-term investment in growth-oriented small/medium firms. (iii) Apart from providing funds, the investor also provides support in the form of sales strategy, business networking and management expertise, enabling the growth of the entrepreneur.