Frequently Asked Questions

What is the difference between venture capital and risk capital?

Venture capital and risk capital are two terms often used interchangeably in the investment world, but they do have subtle differences. Venture capital is a type of financing that investors provide to startups and small businesses that are believed to have long-term growth potential. This type of investment is typically made by high-net-worth individuals, institutional investors, investment banks, and other financial institutions. Venture capital can come in the form of monetary investment or in the form of technical or managerial expertise. On the other hand, risk capital, also known as patient risk capital, is a subset of venture capital. It refers to the funds used for speculative, high-risk, high-reward investments, such as investing in a startup. The term "risk capital" stems from the fact that these investments carry a high degree of risk, with the potential for significant financial loss if the venture fails. However, they also have the potential for substantial returns if the venture is successful.