VC theory, or Venture Capital theory, focuses on how investors provide funding to startups and small businesses with high growth potential. It emphasizes the importance of assessing risks and returns, as venture capitalists often invest in companies that may not yet be profitable but have innovative ideas or technologies. The theory also highlights the role of venture capitalists in guiding and mentoring entrepreneurs. By offering not just financial support but also strategic advice and industry connections, VC theory suggests that these investors can significantly increase a startup's chances of success in a competitive market.