Risk Capital

Definitions

1. Capital invested with the understanding that the probability of loss is meaningful because the opportunity is uncertain but potentially high return. Venture capital is a classic form of risk capital.

   In plain English: Money invested in risky opportunities that may fail but could produce large returns.

   Example: "Biotech often needs true risk capital because timelines are long and failure rates are high."

Related Terms

• Burn Rate
• Compound Growth
• Cost Center
• Dead Cat Bounce
• Escrow
• Internal Rate of Return
• IRR
• Management Fee
• Risk Tolerance
• Scout
• Upside