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What is Venture capital?
Venture capital is money that investors put into young companies in return for a share of them.
- Category Business & money
- Also called VC, venture capitalist
- Updated 20 Oct 2026
Venture capital, explained simply
Venture capital is money from investors who bet on new companies. They take a share of the company in return.
The investors, often called VCs, expect most of their bets to fail. They hope a few will grow very big.
This matters to you because VC money pays for many AI tools. It can keep a tool cheap or free while the company grows.
For example, a VC firm may fund a young AI company so it can buy computers and hire engineers.
On ITG Now, daily AI news stories often name the investors behind an AI company's latest funding round.
Related terms
Funding roundStartupValuationAcquisitionAI bubble
Questions people ask about Venture capital
What does VC stand for?
VC stands for venture capital, or sometimes venture capitalist. It means money or people that invest in young companies.
Is venture capital the same as a loan?
No. A loan must be paid back. Venture capital buys a share of the company instead.
Why do free AI tools often have venture capital behind them?
Investor money can cover costs while the company grows. Prices may change when that money slows down.