What is a VC?

Venture Capital is an influential sub-sector of Private Equity, which is itself a powerful sub-sector of the broader finance, investment, and wealth management worlds. Venture capital is also known as “risk” capital - as it is very risky. VC firms invest at the earliest stages of a business, and there is often limited information about its potential and its market. VC-backed companies have a high failure rate, but when they are successful, they can create huge financial returns for their investors.  Partners at venture capital firms are not investing their own money. They raise their funds from investors (aka Limited Partners or LPs) and are then responsible for delivering returns to their investors based on their fund’s performance, which is based on the businesses they have invested in multiplying in value over time. In summary, a VC’s success is tied to making early bets, sometimes on ideas alone, that will turn into high growth businesses that tend to disrupt a legacy industry or old way of doing things.