Venture capital has been an attention-grabbing, headline generating asset class from its very beginning. Many household names started out as (or still are) venture backed investments, including Apple and Microsoft in the 1970’s/1980’s, Google and Amazon in the 1990’s, Facebook and SpaceX in the early 2000’s, and Uber, Airbnb, DoorDash, and Peloton in the mid 2000’s. More recently, venture capital has become a dominating presence in the cryptocurrency and artificial intelligence industries, driving innovation through investments in companies such as Coinbase and OpenAI.
The primary allure of investing in venture capital lies in its risk/reward potential. Investors are typically drawn by the potential to generate some of the highest returns of any asset class, but they should be aware of the increased risks that brings. We have designed this primer to provide an overview of the venture capital asset class as well as contrast it to other private markets strategies, particularly buyouts.