From the idea to the realization of each project or business, the key challenge is the way of financing. Entrepreneurs have at their disposal traditional forms of financing such as bank loans, loans from friends or their own savings, but also alternative forms of financing that have become increasingly represented and recognizable in the business world. Alternative forms of financing include: venture capital, which is also the subject of this paper, EU funds, business angels, crowdfunding and the like. Venture capital as an innovative source of financing provides the entrepreneur a large amount of initial capital that is needed to realize an innovative idea. Venture capital implies an increased level of risk, as its name suggest, but only for an investor who invests his financial resources in an entrepreneur's business for which he does not know whether it will be successful. In practice, many terms are used for venture capital, such as venture capital and private equity, for which the authors cite differences. The main difference between these concepts is that venture capital is most often directed at new companies and those that are in the early stages of development, and in addition to investment capital, it also provides expert advice to the entrepreneur from the very beginning. Private equity, on the other hand, is a broader term, where investments are made at any stage of the business and do not have to involve the participation of venture capitalists in running the business. In Croatia, venture capital began to be recognized and promoted only a few years ago, while in developed European countries it is quite represented in the financing of startups and companies in early development. Several initiatives started by the CVCA and the Government of the Republic of Croatia have attracted larger venture capital investments in domestic companies and intensified activities in the domestic private equity market are expected in the future.