Start-up businesses and venture capital

The start-up stage of the business life cycle clearly represents the highest level of business risk. There are compounding risks associated with whether the new product will work effectively; if it works, whether the product will be accepted by its prospective customers; if it is accepted, whether the market will grow to a suffi cient size given the development and launch costs involved; and, even if all this succeeds, whether the company will gain an adequate market share to justify its involvement in the industry.