The Role of Venture Capital in Equity Financing Part 4
• Venture capital financing is a very risky type of financing since most startups fail, and one may lose his or her total investment.
• Low Returns: Some of the venture capital investments do fetch huge returns, while others are not rewarding at all. The average return on investment also varies a lot between venture capital funds.
• Ability to Concentrate: Venture capital firms tend to carry significant power over the startups in which they invest. This can raise several concerns relating to the concentration of power and possible conflicts of interest.