Venture Capital firms invest in private companies that need capital to develop and market their products. In return for this investment, the venture capitalists exact a price – significant ownership of the company and seats on the board of directors. For the most part, venture capitalists focus on companies in the technology, medical and retail sectors, and typically shy away from capital intensive business models. Venture capitalists raise money from institutional investors, state pension funds and high-net-worth individuals, usually in the form of partnerships. Investors should consider the venture capital firm’s track record and expertise when evaluating an IPO.