Groundlearn / Glossary / Venture capital
Venture capital
A CFA term, defined in plain English with the distinction examiners test.
What it means
Equity investment in early-stage companies with high failure rates and highly skewed outcomes.
The exam angle
Returns are driven by a handful of holdings. Median fund performance is a poor guide to what a top-quartile fund does.
Where it appears in the syllabus
- Alternative InvestmentsCFA Level I · exam weight 6–9% · Private capital, real estate, natural resources, hedge funds, digital assets.
Related terms
- Capital callThe general partner’s demand that limited partners transfer part of their committed capital.
- Capitalisation rateNet operating income divided by property value — a property’s unlevered income yield.
- Carried interestThe general partner’s share of a private fund’s profits, typically around 20%.
- Contango and backwardationContango is a futures price above the spot price; backwardation is a futures price below it.
- Distribution waterfallThe agreed order in which a private fund’s proceeds are shared between limited and general partners.
- General partnerThe manager of a private fund, responsible for investment decisions and bearing unlimited liability for the partnership.
Educational content only. This is not financial, investment, legal or regulatory advice. Check the official curriculum for your own exam before relying on any definition here.
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