It comes from large investors: often university endowments or public pension funds. These groups are called the "Limited Partners", or "LPs". It's usually a sma

It comes from large investors: often university endowments or public pension funds. These groups are called the "Limited Partners", or "LPs". It's usually a small percentage of those investors' overall investment portfolio. When there is an exit--a sale of stock--most of the money goes back to these LPs. The money is (more or less) split like this: the LPs get their investment back first then, of the gain, 80% goes to the LPs and the rest goes to the company managing the venture fund to split up as it pleases (this last 20% is called the "carry".)