Venture Capital: From potential gains to total losses!


The first investments in venture capital date back to the 15th century, to the time when the maritime expeditions where funded, expecting profits despite the high risk of total loss of investment.

 Another important period for the growth of venture capital investments, as an economic activity, is found in the 18th century, in England. As a result of the Industrial Revolution, a favorable atmosphere emerged for investments in emerging projects with high potential for significant profitability. This happened due to the emerging merchants, shipowners and weaving businessman that needed financial funding.

The first venture capital investments as we know them, originated in the USA and date from the mid-1940s. In 1946 was created the first venture capital investment firm managed by professionals dedicated to make high-risk investments.


Venture capital is a form of corporate investment that finances enterprises and endorse their growth and development with important impacts on management. It constitutes one of the main financial sources for new companies, start-ups and risk investments with high growth potential.

Venture capital  comprises a specific and thorough analysis of the projects and their potential, measuring the risk.


Having made this analysis and with the investment approved, the venture capital becomes a stakeholder, since it benefits from it’s growth.

When compared to other investment ventures, this is the only one that assumes the business’s success as it’s own.


It fully assumes the market challenges since it won’t generate profit from the invested capital but rather, from the success of the financed firm. The earnings of the investors are dependent on the outcome of the company’s work.

The investors acknowledge and understand the high risk they undergo, having a real chance of total loss of capital… they are stakeholders: if the company fails, they won’t benefit from their investment. If it succeeds, they will be rewarded.


Venture capital is an interesting alternative to capitalize small to medium companies, lessening the hardships these firms have in early growth stages.


Venture capital is a part of a company’s social capital, supporting it’s management and helping maximize it’s success, since the profit is dependent on the company’s results. Nonetheless, the profit is not guaranteed. This high risk may or may not pay off.