If you asked me early in my investment career, I’d have described risk as “the thing that could go wrong”
Over time, I’ve shifted my definition.
A risk is what you get paid for!
Within that, there’s “good” and “bad” risk.
Good risk is something like “we believe the application layer is where AI value will accrue. We could be wrong.” It’s something that can be influenced, but is largely out of your control.
Bad risk is “we don’t know who this founder truly is and what motivates them.” These risks are largely in your control. You can kill them with diligence, or direct company support
Knowing the risks the market’s actually paying you to take is 90% of the investing game.
Doing it well is a real art.