The fund capital risk are investment funds that manage money from investors seeking private equity stakes in startup companies and SMEs with strong growth potential. These investments are generally characterized as high risk / high return opportunities. In the past, venture capital investments were only accessible to professional venture capitalists, although now accredited investors have a greater ability to participate in venture capital investments.
Venture capital is a type of equity financing that gives entrepreneurial companies or other small businesses the ability to raise funds. The venture capital funds are investment vehicles of private capital looking to invest in companies that have high risk profiles / high return, based on size, assets and development stage products of a company.
Venture capital funds differ from mutual funds and hedge funds in that they focus on a very specific type of early stage investment. All companies that receive venture capital investments have high growth potential, are risky and have a long investment horizon. In addition, venture capital funds take a more active role in your investments by providing guidance and often serving on the board.
Venture capital funds have portfolio returns that resemble a barbell approach to investing. Many of these funds make small bets on a wide variety of young startups, believing that at least one will achieve high growth and reward the fund with a comparatively large outlay in the end. This allows the fund to mitigate the risk that some investments will be withdrawn.
Investments in venture capital are considered as initial capital or financing in the expansion phase depending on the maturity of the business at the time of investment. However, regardless of the investment stage, all venture capital funds operate in the same way.
