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Where did the name venture capitalist come from?

I misunderstood the name Venture Capitalist when I first heard it. How did the name for that career come about, and what exactly does it mean? I'd like to know in case it comes up in an interview #finance #venture-capital

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Justin’s Answer

Venture capital is money (capital) provide to a young business (a new venture) to help the company grow. When the company is so young that it doesn't generate enough money to hire employees, buy equipment, or start manufacturing a product, this venture capital can be quite helpful. A person working for a venture capital firm can also provide advice to the management of a young company on how to design a product or service, how to find suppliers and customers, and other basic elements of how to run a business.

Thanks this really helped Tristan B.

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Simeon’s Answer

You could think of venture being very close in meaning to adventure. It's going into the unknown and taking risks for the chance at a big payoff. Essentially, venture capitalist do their best to look for ventures by newer, smaller companies that are likely to succeed. They give these small companies injections of cash in the hope of getting a lot more money back if these small companies expand into becoming much larger.

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Mohummed’s Answer

Venture capitalists typically scout for startups and newly formed entities, where they see growth potential and a high return on their investment.

They typically take an equity stake in the target firm and then mentor it as well towards a growth path. There are many institutional and individual venture capitalists, including Mark Cuban, Soft bank etc that make such deals.