Venture Capital

Venture Capital (VC) is a type of private equity financing that targets early-stage, high-growth companies, often with unproven business models or technologies. VC investors take equity stakes in startups, aiming for outsized returns through future exits—such as IPOs or acquisitions.

Unlike later-stage buyout funds, venture capital thrives on asymmetric risk-reward dynamics. Successful VC funds often follow a power-law distribution, where a small number of portfolio companies generate the bulk of returns.

Key Characteristics:

  • Focus: Innovation-driven startups (tech, biotech, climate tech, etc.)

  • Stages: Seed, Series A/B/C+

  • Exit Timeline: Typically 5–10 years

  • Risk/Reward: High risk, high return potential

As Invest Europe reports, European VC investment reached record levels in recent years, supported by deep tech, fintech, and climate-related innovation. Funds like EQT Ventures and Speedinvest have helped institutionalize early-stage investing across Europe.

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