Venture Capital, or VC investing, is essentially the same as private equity investing in private companies, save for the fact these are very young, or new companies. In some cases, operations may have not yet even formally begun yet. For the same reasons as P.E. investing and combined with the fact these are young and risky companies, this is a risky investment endeavor.
Objectives and Risks
Like most investments, mutual funds and pooled investment vehicles add diversification and a needed layer of safety for individual investors to play in the VC space. Large private companies these days even offer private shares to employees, which have made their way to the market place. Though no longer true startups, firms including Uber, Lyft, and Airbnb have shares floating among a growing community of private investors.
How To Buy or Sell It
Funds are the best first option. Private shares from employees on website exchanges are growing in popularity. Investing in VC startups is increasingly popular among crowdsourcing entrepreneurs, or accredited investors who pool their funds together.
Strengths
Stunning (though rare) potential upside
New or game changing markets
Diversification through Funds and growing private websites
Weaknesses
Illiquid investments
Accreditation needed for actual companies
Low success rates
Key Considerations
Liquidity: Low
Historical Returns: High
Inflation Protection: Medium
25 Investments: Zero-Coupon Securities
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