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Innovative non-conventional entrepreneurship ideas, coupled with risk taking and need to provide capital for the successful implementation of these ideas, gave birth to the concept of venture capital (VC). The world economy has evolved significantly since 2008, after a strong blow of financial crisis. Venture capitalist is no more exception to it. Venture capitalist is one among the primary engines which drive for expansion and growth. Despite the adverse effect of recession, people with innovative business ideas are coming forward to bring the economy back on track. VC investment rose during 90’s. Post 2001, there was a significant decline in venture capital investment due to stringent government policy and the fluctuating economy. But favorable market condition and the support of government in recent times as encouraged youths and people to come up with new business ideas and set up their own ventures, which eventually would solve various economic problem like unemployment. Finding an optimum solution to these problems is the need of the hour. The concept of VC is not new to the Indian economy. This activity was promoted by setting up financial institution like IDBI, ICICI and State Financial Corporations. These institution provided finance to small and medium enterprises by funding them through debt capital. This model benefitted the economy by encouraging the financials inclusion. With the help of these institutions people from the backward areas of the country established their ventures and introduced new technology and products in the markets. This paper provides the venture capital process as well as discusses the role of VC in providing innovative solutions to economic problems. It also highlights various regulatory frameworks to encourage the venture capitalists. The paper also depicts the future prospects of venture capital in India.