Venture capital is money invested in private companies that are still building their products, teams, or markets. In return, the investor takes an ownership stake and often a board seat or strong influence. Many of these firms never reach a profitable exit, so the model accepts high failure rates in hope of a few large successes.
Key takeaways
- VC is usually for private firms, not for everyday listed shares on an exchange.
- Rounds of funding dilute earlier owners when new shares are issued to investors.
- A later IPO or sale is a common exit path, but neither is guaranteed.
- Retail investors typically meet VC only indirectly, through funds or news of start ups, not by buying VC stakes on a public board.