A Venture Capital Hybrid, is basically a VC firm that does not just invest in private companies, but also will occasionally invest in public companies as part of investment strategy.  Traditionally, most VC Firms invest almost exclusively in private companies, with the idea of taking those companies public, only as an Exit Strategy.  This would allow them to sell some of their equity (stock) position to recoup their investment without having to sell a majority position or their entire position in that company.  

Some of the reasons why a Venture Capital Hybrid will analyze and look at investments in public companies, as well as private companies, is because they have so much more money to manage and the lack of quality deals to fund.  The fact that the public deals have more liquidity with their publicly trading stock doesn’t hurt either.

Surprisingly, in the field of Hedge Funds, there have also evolved Hedge Fund Hybrids that will occasionally invest in private companies, even though their primary focus is on public companies.    

The Venture Capital Hybrid, as result of investing in some public companies, also has more flexibility in the types of funding structures they use. As a result, these firms have had to increase their staff and hire analysts and consultants experienced with publicly trading companies. Where the focus in a private company transaction is on the business model and performance of the management team, the dynamics change with a public company. Also, the costs of running a public company are significantly more than running a private company.