Venture capitalists invest in new businesses in exchange for an equity stake. Whether they make any money at all, or how much they make, is determined by the success of the target business. Hence, venture capitalists are selective about what they invest in, but high growth potential is a key expectation, often in 3–7 years.
Not all of their investment pay off. Venture capitalists invest in risky start-ups in the hopes that some of the firms they support will become very successful. The start-ups they seek are usually based on an innovative technology or business model.
Traditional VCs are finally investing in cryptocurrency and blockchain startups.
As the linked article points out, “Household names like 500 Startups and Andressen Horowitz have made the top 10 after showing continued interest in funding blockchain projects. The study – put together by Crypto Finance Conference and exclusively shared with Hard Fork – highlighted how traditional venture capitals are spreading their risk by investing in specialist blockchain funds as well as startups.”