Learn in the textbookMechanisms for Commercialization Support and Venture Funding
DefinitionVenture capital (ベンチャーキャピタル) refers to investment firms that put money into unlisted young companies with growth potential and profit by selling their shares once the companies have grown.
ExplanationMany of the companies it backs will fail, so it spreads its money across several of them and relies on a few big successes to make the whole portfolio profitable. For start-ups, it is a way to raise money at a stage when they lack collateral and a track record and struggle to borrow from banks.
AnalogyIt resembles a sponsor who funds an unknown young athlete early on and collects a return once the athlete becomes a star.