What is an Adventure Capitalist?

While the exact meaning of adventure capitalist has changed over the years, the current designation is still close enough to its roots to maintain some degree of continuity. Essentially, an adventure capitalist is an individual who provides a steady stream of capital to a business or other entrepreneur in exchange for some sort of interest or recompense in regard to the project that the lender wishes to undertake. This remuneration can come in several forms. Here are some examples of how an adventure capitalist works.

Originally, the term had to do with wealthy sponsors who would bankroll the costs associated with an expedition assembled to explore a region of the world, or to hunt for a particular object. These sorts of activities often required the participants to raise capital in some manner. Those who chose to sponsor and financially support the efforts were referred to as adventure capitalists, since they were willing to cover the expenses generated by an expedition or adventure.

Today, an adventure capitalist is sometimes referred to as a venture capitalist. By either term, the outcome is the same. A wealthy individual encounters a project that is of interest to him or her, meets with persons who wish to oversee and execute the project, and makes a decision on whether or not to extend funding to the endeavor. While adventure capitalists may choose to seek recompense in a number of ways, the most common when it comes to launching a new company is being awarded a seat on the board of directors of the new entity. This allows the adventure capitalist to participate first hand and observe how his or her influx of cash is being managed. In other situations, the adventure capitalist may choose to seek compensation in other ways, such as being featured prominently in the publicity generated by the project, or with some sort of agreement of a sharing of profits should the project achieve its stated goals.

It is important to recognize that an adventure capitalist is not a financial institution that issues loans. Rather than an agreement specifying repayment terms with a rate of interest, the funds are usually extended with specifications of what the adventure capitalist can expect to receive from the effort. This may be a role in the governance of the organization or some sort of intangible benefit. The smart adventure capitalist will also consider not only the potential for success with the project, but also with the possible failure of the endeavor. Typically, the adventure capitalist will recoup a portion of the loss from a failed venture through tax breaks. However, the responsible adventure capitalist tends to focus on projects where the chances of success are high, and the opportunity for rewards very great.