Investment funding provided to early-stage, high-growth companies with strong potential for significant returns. VC firms provide capital in exchange for equity stakes, often adding strategic guidance and industry connections to help companies scale rapidly.
Term coined in the 1940s from 'venture' meaning risky undertaking and 'capital' meaning investment money. The concept formalized in Silicon Valley during the 1960s as technology companies needed specialized investors who understood high-risk, high-reward business models.
Venture capital is built on a 'power law' that defies normal business logic! VCs expect 70% of investments to fail, 20% to break even, and 10% to return 10x or more—meaning one massive winner can make an entire fund profitable, encouraging them to swing for the fences on every deal.
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