The venture capital industry, with its pre-and post-partners, Angels and investment bankers, generally invest in new and growing companies. Venture capitalists push the limits with respect to the risk/reward ratio. They purchase equity with its system of development, and add value by participation---high risks for high rewards. Venture capitalists have the idea that one winner in ten, more than compensates for the losses. For example, an 80% failure rate (we will discuss this in some detail later on) is an excellent portfolio management strategy. Venture capitalists historically have made somewhere between 11% and 40% gain compounded for a relatively short time. The view for venture capitalists is anywhere from three to twelve years.
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