Equity Investing Information

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Venture Capital Investing

Direct venture capital is a very high-risk, high-return investment vehicle, usually reserved for only the wealthiest of individual investors.

Most venture capital deals an individual or private corporation offering capital to a small underfunded company, in exchange for equity in the business. Many of the best VC investment opportunities involve new “start-up” companies with some kind of innovative yet speculative product or service, which are unable to qualify for traditional financing, due to the high levels of risk.

Because of this, there are no guarantees for venture capital investors, and it is quite possible to walk away from a deal at a 100% loss if the company you invest in goes bankrupt. The potential rewards of investing in a successful start-up, however, can be enormous, especially if your company of choice manages to capitalize on a big trend, or become an innovator in a hot new market.

There is no doubt that fortunes can be made in venture capital, but the high risk and lack of liquidity associated with direct venture capital makes it an unrealistic option for the majority of individual investors.