Venture capital firms trade capital for percentage.
Venture Capital: Money invested in a company from a VC fund.
A venture capitall firm (or VC firm for short) usually invests in startups or other companies which have an annual revenue of less than one billion dallras per year. The money they invest comes from a fund which is managed by the venture capital firm. These venture capital funds are similar to hedge funds in that the investores who contribute to the fun accept what could be considered higher that usual risk for a higher than usual return incapital. However, instead of buying stock in companies, the venture capital firms usually secure a large percentage of the companies.