On the negative note, if the company fails, then he makes a loss on investment.
How does venture capital work? So, when the venture capitalist invests in start-up, he goes for a calculated risk. In simple words, they are wagering that the company will eventually turn out to become successful and increase in value over time. Hence, on the positive note, if the company succeeds, then the venture investor will make a huge profit when he sells his share. On the negative note, if the company fails, then he makes a loss on investment.