Venture capital financing (also known as venture capital funding or VC funding) is a form of financing for new or early-stage companies with high growth potential. Venture capital financing is offered by venture capital firms, which are professional investment firms that receive investment money from state pension funds, university endowment funds, and wealthy individuals. Venture capital firms seek multiple returns on their initial investment in a startup company. When evaluating companies to invest in, venture capital firms consider many factors, including (1) the strength of the management team; (2) the size of the market the company is in (total addressable market or TAM); (3) whether the company has proven there is demand in the market for its product or service (product-market fit); and (4) how easy or difficult it will be for other companies to compete with the company seeking venture capital financing.

In Kentucky, venture capital financing is not governed by a specific set of state statutes but is subject to general state laws that regulate securities, business entities, and contractual agreements. Kentucky businesses seeking venture capital must comply with both state and federal securities laws, including the Kentucky Securities Act and the Securities Act of 1933, which require proper registration of securities or a valid exemption for private offerings. Venture capital firms in Kentucky, like elsewhere, typically conduct thorough due diligence on potential investment opportunities, assessing factors such as the management team's strength, market size, product-market fit, and competitive landscape. These firms must also adhere to federal regulations, including those enforced by the Securities and Exchange Commission (SEC), which oversees the operation of venture capital funds and investor protections. Additionally, Kentucky's Cabinet for Economic Development may offer resources and support for startups looking to attract venture capital investment.