Which of the following statements best describes venture capital?

Venture capital refers to funds invested in startup or small businesses that exhibit high growth potential in exchange for equity, or ownership shares, in the company. This type of funding is typically provided by investors or venture capital firms that are looking for substantial return on their investments as these companies grow and succeed.

By acquiring an ownership share, venture capitalists are able to benefit directly from the business's success, as their returns are tied to the company's performance and valuation increases. Unlike loans, which require repayment regardless of the owner's business outcomes, or government grants, which do not expect a share of ownership or profits, venture capital is fundamentally linked to becoming a stakeholder in the business. This model aligns the interests of the investor with those of the business owner, as both are incentivized to drive the company towards profitability and growth.