Investors get a piece of the business. If the business fails, as part owners, they lose the investment. An investor should know the risk of losing the investment - if not, they should not be investing. This is why investors will spread their investments out over a number of businesses, with the hope that the successful ones will over-compensate for the failed ones. This is also why investors will usually not invest until the original owner has reached a point where the risk can be somewhat calculated.

When an individual or company invests in an entrepreneur's business idea, what leverage do they carry, in case the business fails? Or does the agreement usually involve the investors understanding the risk of loss?