What risk do investors take on when they invest or loan money to new businesses?

Investors and lenders face several risks when funding new businesses, primarily the risk of failure, as many startups do not survive beyond their initial years. This can lead to a total loss of their invested capital or loans. Additionally, there is market risk, where changes in consumer demand or economic conditions can adversely affect the business's performance. Lastly, there's the risk of illiquidity, as funds invested in startups may be tied up for extended periods with no guarantee of returns.