Who Are Venture CaPitalist?

Venture capitalists are words thrown around and words used in the financial community, out of curiosity I tried to know what venture capitalists are. I am sure that most of us have been in situations where we understood the meaning of a word without checking the dictionary because of the way it was used. Turns out venture capitalists is one of those words for me. I used to interpret it as one of those capitalist that venture into investing in small, or rather in startups hoping they grow big so they can make back their investments. Well i wasn’t wrong, that was just the simplest way to understand venture capitalists in my view.

Having a business idea or an innovative idea is not enough, you need money to back it up, without money lots of innovative ideas that changed the world won’t have been a reality today. Venture Capitalists are firm with investors who have a lot of money to invest but have to look for companies and startups that they believe in and trust will be a success in the future so they can fund these companies hoping to have a stake in the company or equity to make high yields or ROI(Return Of Investment) when the company becomes successful.

This can be seen in the smallest way possible, even amongst family, for instance, when my sister wanted to start her interior decorating business, she asked me to invest in her business and I will be getting 50%. So if I had invested in her business I would have a 50% equity in her business. Now imagine it in a big way but on the bigger professional level.

There are risks on the venture capitalists side, in the sense that, if the company being invested into flops, this means that their investment is gone. They are not getting their money back and this is the problem lots of venture capitalists face while investing in startups.

Lots of businesses that became a big success in the world today got funded by venture capitalists, we have the Facebook, Twitter, PayPal and more. Sometimes, some of this venture capitalists can be extremely wealthy guys from wealthy homes and don’t need to be in venture capitalists firm to invest. They alone can fund businesses and startups, and sometimes while funding these businesses, they can decide and negotiate to hold the title of ”co-founder”.

In crypto we see that happen every day, I think in crypto ICO(Initial Coin Offering) is a form of venture capitalism, where you have certain amount of the coin after investing on the crypto startup. Ethereum and Binance should be one of the crypto platforms that had venture capitalists invest in it early days. These venture capitalists owned large equity of BNB and ETH afterwards. A company like Binance, the venture capitalists can have a say or shares in the company and can make decisions hence making it highly centralized.

But for a platform like Hive with no venture capitalists, the equity and funds where funded organically from the community with no central authority giving commands on how the platform runs, we can see how no one’s opinion can affect the blockchain without voting from every Hive power holders. This is something we call governance, that’s the reason Hive coin is also a governance token used by every Hive power owner to help influence decisions made on the blockchain no matter how small their Hive power is.

Venture capitalists help a project grow faster but community funded project gives sustainability to the project. A venture capitalist firm can decide to not have interest in the project and sell off their stakes or holdings and leave. They can also influence decisions in the project for their own benefits since they invested largely into the project.

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