Identify Characteristics of Venture Capital in Private Equity

Private equity refers to investments made in private companies or in public companies with the intention of delisting them from public stock exchanges. It typically involves acquiring a significant stake in a company with the goal of improving its operations and increasing its value over time. Different types of private equity investments include venture capital, growth equity, buyouts, and distressed investments.

Consider the following scenarios involving private equity investments. Among the three options provided, identify which option accurately describes a fundamental characteristic of venture capital as a subcategory of private equity.