Venture Capitalist

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DEFINITION of 'Venture Capitalist'

An investor who either provides capital to startup ventures or supports small companies that wish to expand but do not have access to public funding. Venture capitalists are willing to invest in such companies because they can earn a massive return on their investments if these companies are a success.

Venture capitalists also experience major losses when their picks fail, but these investors are typically wealthy enough that they can afford to take the risks associated with funding young, unproven companies that appear to have a great idea and a great management team.

INVESTOPEDIA EXPLAINS 'Venture Capitalist'

Well-known venture capitalists include Jim Breyer, an early Facebook investor; Peter Fenton, an investor in Twitter; Peter Theil, the co-founder of PayPal and Facebook's first investor; and Jeremy Levine, the largest investor in Pinterest.

Venture capitalists look for a strong management team, a large potential market and a unique product or service with a strong competitive advantage. They also look for opportunities in industries that they are familiar with, and the chance to own a large percentage of the company so that they can influence its direction.

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