At their core, all investment opportunities can be evaluated based on the risk of losing your original capital and the potential return of the investment. That risk/reward spectrum looks like this:

There is no empirical basis for this graph — just my intuition

The greater the risk, the greater the potential reward. Different asset classes have different risk/reward profiles. Bonds aren’t risky but necessarily offer little reward. Equities can deliver greater returns, but the risk is greater as well. Within equity there are different strategies with various risk/reward profiles. For example, an index that tracks the S&P 500 will deliver consistent, modest returns whereas an actively managed fund may be able to deliver greater returns, but with higher volatility.

These types of investments all fall neatly along the risk/reward trendline. Venture investment likewise has a traditional risk/reward profile in that risk matches reward but is unique in being particularly rewarding and particularly risky.

I’ll use venture capital as the benchmark against which I’ll measure the best investment in the world because readers on medium.com will likely be most familiar with entrepreneurship and venture capital.

Venture capitalists invest in startups, and although the risk of failure is high for startups (90% is the often quoted figure), if you pick one or two big winners, you’ll make a ton of money and maybe you’ll even get to hold hands with Donald Trump like early Facebook investor, Peter Thiel.

That sounds pretty great so let’s look at the numbers when it comes to an investment in a startup:

Risk: The classic rule of thumb is that 10% of a VC’s investments will deliver all of their returns. Though actual academic research gives the VCs slightly better odds, the lack of good data on the subject makes them rough guesses at best. Let’s stick with the idea that 90% of venture backed startups fail to deliver significant returns.

The classic rule of thumb is that 10% of a VC’s investments will deliver all of their returns. Though actual academic research gives the VCs slightly better odds, the lack of good data on the subject makes them rough guesses at best. Let’s stick with the idea that 90% of venture backed startups fail to deliver significant returns. Reward: Determining the possible reward to a VC is also a bit difficult. Let’s say that your fund invests in the next Uber, a company worth, supposedly, $66 billion. That’s a big pie and a phenomenal return no matter the size of your fund’s slice. If you’re one of the top VCs of the decade and you were on Facebook’s cap table at their IPO, you’ll walk away with a few billion dollars.

So, venture capital is high risk and high reward. The failure rate is 90% but you could walk away with a few billion dollars. Not bad. But what if there were an investment in the green part on the right of the risk/reward trendline? What if there were an investment where the reward vastly exceeded risk? Well, it would certainly be the best investment in the world.

What is this investment?

A coup d’état