What is a Venture Capitalist? | Explain Like I'm 5 with Stijn Vanorbeek

What exactly does a venture capitalist (VC) do? In this conversation, we break down venture capital in the simplest terms—how VCs operate, where their money actually comes from, and why they’re really just managing a high-risk asset class for others.

This episode dives into the business of venture capital, how VCs raise money, and why their success depends entirely on delivering returns. Whether you're an entrepreneur, investor, or just curious about the startup world, this discussion demystifies venture capital in a way that makes sense.

Key Topics:

• What venture capitalists actually do
• Why VCs don’t invest their own money
• How venture capital is a high-risk, high-reward asset class
• The cycle of raising funds, investing, and exiting
• Why VCs must deliver returns to stay in business
• The misconception that VCs are using their own wealth

Quotes:

• "A venture capitalist is someone who makes money with someone else’s money."
• "VCs don’t invest their own capital—they manage high-risk funds for others."
• "If a VC doesn’t generate returns, they’re out of business. If they do, they raise another fund and repeat."
• "Venture capital is about finding high-risk, high-reward opportunities and placing bets."
• "At the end of the day, a VC is just a money manager playing in the startup world."