Definition: Adventure capitalists are defined as Venture Capitalists willing to take a long-shot gamble on risky, high-reward investment strategies. VCs invest in early-stage firms and entrepreneurs because they believe such ventures have a chance of succeeding and providing high returns.
These investors generally engage in a high-risk, high-reward strategy to make high returns for their investors without much risk themselves. While the exact methodology by which these investors accomplish this is obscure, the end result is a high-volume and high-quality stream of venture capital being poured into new technology projects by some of the world’s most talented entrepreneurs and businesspeople.
Basically, an adventure capitalist wants to make as much money as possible on his or her investments instead of being concerned with profit margins or interest rates.
They believe in the power of initial capital and have backed several high-profile companies, including Reddit, Lyft, and Airbnb. Their passion for risk-taking is what has earned them a reputation for taking on the biggest risks in tech today.
The primary characteristic of adventure capitalists is their willingness to take significant risks with their capital, often hoping to achieve returns greater than those obtained by more cautious investors. Since these investors take such risks, it is generally accepted that they will typically over-perform other investors in similar situations.
The objective of an adventure capitalist is to find undervalued opportunities in the business world. These investors usually participate in early-stage venture capital funds, which are often privately held and long-term in nature. Their participation and/or bookkeeping skills help finance high-risk, high-reward technologies, companies, and projects.
An Adventure Capitalist will liquidate their stake in the company at some point and will try to find ways to improve the company even if it means taking some risk. An Adventure Capitalist’s goal is to maximize their winnings.
They invest in early-stage startups with the expectation that they will return a higher rate of return than if they waited until later in the development process. Adventure capitalists are thus willing to take some risk — typically regarded as one percent or less — on a portfolio of investments.
The best adventurer capitalists focus on technologies, business opportunities, or companies with some unique ability, such as taking on an extremely risky product-development project or having developed a few significant products in very short order.
Adventure Capitalists should realize that the successful companies they invest in have a lot of capital behind them. Typically, they have founders, investors, and/or other business professionals that have invested millions of dollars into the company. Typically, this means that any profits made from investing in capitalist adventure firms will be used to benefit existing investors and founders rather than being seized by executives as bonuses for themselves.