system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5:Venture Capital Firm/Hedge Fund/Mutual Fund

What are the differences and is there any crossover in terms of who they do business with?
gpt
The other response is great, but not ELI5.

**Venture Capital**: "I want to start a lemonade stand." "Ok, I'll give you $10 so you can buy supplies, but then you owe me 30% of your earnings." This is called an "investment".

**Hedge Fund**: A group of people that are really good at figuring out the best lemonade stands to invest in, *with the goal of making a* **lot** *more money than the "safe bet" lemonade stands*. That group of people can only take money from their close friends, because they make very risky lemonade investments.

**Mutual Fund**: A collection of lemonade stands that you can invest in all at once. But you only have to bother with giving money to *one* person, who manages splitting your money (and everyone else's money) up between all the lemonade stands. Usually, but not always, the collection of lemonade stands is picked to be a pretty safe bet.

**Edit**: Noticed the second part of your question about crossover. Hedge funds and mutual funds *can* invest in the same lemonade stands, but usually don't because the mutual funds invest in the big, established stands but the hedge funds invest in younger, more aggressive lemonade stands. Venture capitalists are separate because they invest in private lemonade stands, and mutual/hedge funds invest in public ones. Being private means that not anyone can invest (you have to talk to the stand's owner first), being public means that anyone can invest without asking permission first.