Venture capital is a form of investment to start a business. Also known as a 'risk capital', venture capital is invested in the form of shares and equity instead of a loan. The main difference between a venture capital and a loan is that it is mandatory to repay loans irrespective of the business' performance. Venture capital on the other hand purchases a share of the company and gets returns based on the company's profits or losses.
Venture capitalists invest in companies they believe will see tremendous in next few years. These investors are shifting focus from the current status of the business to its potential. They are more likely to fund businesses that show prospects of high growth and are managed by a team of ambitious, competent and experienced people.
Venture capitalists invest in businesses for three to seven years, depending on the projected growth and the actual growth. Investors and capitalist firms prefer mature businesses that guarantee better performances than newer companies as they take more time to establish themselves. The process of reviewing the potential of the business and deciding to invest usually takes between three to six months and can sometimes take a whole year.
These investors look for a few qualities in companies and their products before investing. When considering the business venture, investors consider the commercial viability and the potential for constant growth. They also consider whether the potential rewards are worth the initial risk. The potential of the company itself is very vital to investors as they want to know if the management is capable of exploiting the full potential. | 
