Which type of stocks usually have a higher risk but also potential for higher returns?

Start-up companies typically represent a higher-risk investment due to their early-stage development and lack of established revenue streams. They often rely on investor funding to grow and develop their products or services. This uncertainty can lead to substantial volatility in their stock prices. However, because these companies are in the early phases of growth, they also hold the potential for significant returns if they successfully penetrate the market and achieve substantial business growth. Investors are drawn to start-up companies with the hope of capitalizing on their potential success, but this comes with the understanding that many start-ups may fail, leading to a complete loss of investment. Thus, while the risk is higher, the possible rewards from a successful venture can be much greater than those associated with more established firms.