Venture capital has emerged as a dynamic and influential asset class within the realm of investment and entrepreneurial finance. This paper explores the distinct characteristics and unique features that differentiate venture capital from other traditional asset classes and define venture capital as an asset class. The long investment horizon, active involvement of venture capitalists, and the illiquid nature of investments are among the key characteristics discussed.  It delves into the motivations of venture capital investors, the investment process, and the risks and rewards associated with investing in early-stage ventures, emphasizing the desire for high returns and the opportunity to participate in the growth of disruptive innovations. The risks and rewards associated with venture capital investments are examined, shedding light on the unique risk-return profile of the asset class. It discusses the high failure rates of startups and the potential for significant financial losses. However, it also emphasizes the potential for exceptional returns through successful exits, such as initial public offerings (IPOs) and acquisitions. Moreover, it addresses the diversification benefits of venture capital in an investment portfolio, particularly in relation to traditional asset classes. The study further explores the broader impact of venture capital on innovation, economic growth, and job creation. By providing capital and expertise to nascent ventures, venture capitalists play a pivotal role in nurturing entrepreneurship and commercializing breakthrough technologies. The historical evolution of venture capital is presented, tracing its roots back to the mid-20th century and its subsequent growth and evolution. The paper highlights the key milestones and developments that have shaped the industry, including the emergence of prominent venture capital firms and the evolution of investment strategies. It also examines the impact of external factors, such as regulatory changes and technological advancements, on the growth and maturation of the asset class in the United States. The Indian venture ecosystem is in a nascent stage both for investors and early-stage companies raising capital from venture capital funds. The availability of Indian data points is low since the industry is in a very nascent stage here. Hence studying the developed markets can provide us a roadmap of how things can shape up in this extremely important asset class.

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Keywords: Illiquidity Premium, Long-term Focus, Manager Selection, Value Creation, Early Stage, Risk
                    Management.