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Venture Capital

In short

Early-stage startup funding — high risk, potentially extraordinary returns

Venture capital funds startups at early stages (Seed, Series A, B, C). Most startups fail, but one success like Google or Uber can return 1000x. VC is extremely illiquid — investments are tied up for 7-10 years.

Venture capital provides funding to startups and early-stage companies in exchange for equity. The VC model accepts many failures expecting a few massive returns ('power law' distributions). Access is typically limited to institutional investors and high-net-worth individuals.

Related concepts

  • Private Equity — Private equity invests in companies that aren't publicly traded. Typically 10-year investments where firms buy companies, improve them, and sell them for a profit. High potential returns but money is locked up for years.
  • IPO (Initial Public Offering) — An IPO is when a private company sells shares to the public for the first time. It's how companies like Google, Amazon, and Apple 'went public.' IPO shares can pop on day one or drop — the first day price is notoriously unpredictable.
  • Alternative Investments — Alternative investments are anything outside stocks, bonds, and cash — real estate, hedge funds, private equity, commodities, and crypto. They often have low correlation to traditional markets, improving portfolio diversification.