What do you call a firm or individual that invests in new and growing businesses in exchange for ownership?

The term used for a firm or individual that invests in new and growing businesses in exchange for ownership is venture capitalist. Venture capitalists typically provide funding to startups and small businesses that have high growth potential in exchange for equity, or ownership stakes, in the company. They often take on more risk by investing in businesses that may not have a proven track record, but they seek significant returns on their investments if the company succeeds.

This practice plays a crucial role in the entrepreneurial ecosystem, as venture capitalists not only provide financial resources but also often offer mentorship, industry connections, and strategic support to help these companies grow and succeed. Their involvement can significantly influence the future trajectory of the businesses they invest in.

In contrast, business mentors typically provide advice and guidance without directly investing in the company, while investment bankers focus on facilitating capital raising and mergers and acquisitions rather than investing directly in businesses. Private equity firms generally invest in more mature companies, often taking a controlling interest, which differs from the venture capital approach of investing in early-stage enterprises.