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Definition: Venture capital

Christina Hernandez Sherwood, eMed Editor, MedCity News

Definition: Venture capital

Venture capital is an important type of financing for early-stage healthcare entrepreneurs and high-growth startups. In contrast to traditional financing sources, such as banks, venture capital involves investing equity capital instead of debt and involves higher risks in exchange for the potential for higher rewards.

Companies typically receive this financing from individuals (known as angel investors) or from venture capital firms. Venture capital is an active form of financing. Along with capital, these investors and firms also seek to add value to the companies they support. This consists of active involvement, usually through at least one seat on the board.

Definitions are a weekly feature on eMed for current and aspiring healthcare entrepreneurs.

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