Venture capitalists invest in businesses that usually aren't in a position to publicly issue securities in exchange for capital. Venture capital is a good way of getting financing quickly, with fewer up-front costs than those associated with a typical securities offering. But, because venture capitalists invest in higher risk companies and a significant number of their investments do not succeed, they usually demand a greater return on their investment, often requiring financed companies to give up a significant percentage of their equity.
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