Technically speaking, you can do this. For example you could create a private VC firm and convince people to give you their money. You could then "loan" that

Technically speaking, you can do this. For example you could create a private VC firm and convince people to give you their money. You could then "loan" that money to a start-up. That start-up would then pay its employees with the money who could re-invest it with you. You take that money and "loan" it to another start-up. Voila, you've created capital. As soon as you start taking other people's money you are subject to a ton of regulations for limiting fraud. In the above example if you took the funds and bought a house you'd be potentially guilty of fraud.