Legal Definitions - risk capital

Risk capital refers to money or property that is invested in a business venture, especially one that has a high risk of failure but also has the potential for a high return. This type of investment is often made by individuals or companies who do not have managerial control over the business.

For example, a wealthy individual may invest in a startup company that is developing a new technology. The investor knows that there is a high risk that the technology may not be successful, but if it is, the potential return on investment could be very high.

Another example is venture capital, which is a type of risk capital that is specifically invested in new enterprises with high risk and high potential for return.

Overall, risk capital is an important source of funding for businesses that have innovative ideas but may not have access to traditional forms of financing.