What is venture capital?

Venture capital refers specifically to funding provided to early-stage companies that have high growth potential in exchange for equity, or ownership stake, in the company. This type of financing is essential for startups that may not yet have access to traditional funding options like bank loans due to their inherent risks, lack of established revenues, or credit history. Venture capitalists not only provide essential capital but also often contribute strategic guidance, industry expertise, and a network of contacts that can help the startup succeed.

The focus on high-potential startups in this funding model is critical as investors are looking for opportunities that can yield substantial returns over time, recognizing that many of the businesses they invest in will not succeed. Thus, the alliance formed through venture capital is integral to the growth and scaling of innovative companies. This makes option C the accurate description of venture capital.