Venture Capital is a form of private equity financing that provides funding for most early-stage startups and companies with perceived high growth potential in exchange for equity or an ownership stake in the startup or company. While the vast majority of venture capital is concerned with early-stage startups and companies, there are growth-stage companies that also receive funding from venture capital.

Venture capital is not intended to be a long-term investment. The crux of the business model is that it invests in a company's balance sheet and infrastructure until it reaches a size and credibility that allows for it to be sold to a corporation or provide liquidity to the institutional public-equity markets. Thus, a venture capitalist invests in an entrepreneur's idea, nurtures it for a short time, and then exits with the assistance of an investment banker.

Nigerian Context

Venture Capital in Nigeria is regulated by the Securities and Exchange Commission (SEC). The Securities and Exchange Commission Rules and Regulations (SEC Rules) 2007 is the core regulatory framework governing the activities of venture capital in Nigeria.