When a company begins, many people involved in the company have high hopes for success. They feel that this business is going to make a lot of money within a few months. Other companies may also see how successful this company is going to be.
These companies may want to invest their money in this successful company. This is known as venture capital. In early history, venture capital began as private equity which means that a private individual gave the money to the company. By the 1980s and later, this venture capital became known as leveraged buyout.
Venture capital may seem like this only helps the company, but the company administering funds also benefits because they get a profit in return. The primary measure of success for Venture Capital is the internal rate of return.