Venture capital is a subset of private equity. Venture Capital is the early stage form of private equity where investors focus on investing in startup (highly risky) ventures. Private equity refers to the holding of stock in unlisted private companies — private companies that are not quoted on a stock exchange. The funds raised through private equity can be used to develop new products and technologies, to expand working capital, to make acquisitions, or to strengthen a private company’s balance sheet. Venture Capitalists invest in high-risk, high-return investments, with an investment horizon of six or seven years. The venture capitalist’s final goal is to either take the private company public (Initial Public Offering) or Trade sale. Venture capital manages risk typically with staged investments in which the private company has to meet certain milestones before qualifying for additional rounds of financing.