Well funny you should say that, I have some expertise in this area.
> For instance, what happens when growth fails?
C level purge, or outright shuttering the business. This is more of a question of, when will my benefactors tire of gambling on this concept I am building.
> Do you lose ownership of the business?
Usually, in most cases, you give up part of the business to attain the funding, sometimes a board seat. When this happens, if you no longer hold the majority of the voting shares and seats, you can lose the business. If you have cofounders or partners, they may be pressured or persuaded to sell their share, so one VC not being the majority doesnt entirely mean you are safe. The only true safety is being a solo founder, which is why solo founders are encouraged to find a cofounder. Not only can most people not do everything themselves, but a solo founder is not easily broken once theyve made up their mind. There is no "mom" to play against "dad" when a CEO doesn't want to "play ball" with a VC's inane growth plan.
Your assessment is correct, in most cases, unless you are gumroad, you will have to buy back any stake you have sold/bequeathed.
> What happens if you want to do something extremely risky?
If you think it makes sense, do it. If you have a board you have to run it through first, this may not be as straightforward, because youll have to repitch a LOT and revalidate "feelings" and other nonsense.
> My project is a game;
That's awesome, you probably wont have to worry about any of this because most VC, unless theyre in this arena already, will not fund or even entertain a game. Theyll say "go to a publisher" or just outright ignore you. Im not trying to be mean, I love games, I love money.
> what if an asteroid impact seems best for the design, but runs the risk of literally destroying the player base? I can’t imagine that would receive creative encouragement.
Be careful of any VC that would take issue with creative direction decisions. It is important that you and they know that they are the money, you are the talent. If they had the talent and the idea, they'd be bootstrapping your business themselves. There are only so many hours in the day, and irons in the fire. You have all the hours of the day to spend on one iron in your fire. A VC has the hours outside of their things to focus on the myriad of irons in their fire.
One last thing: I know you didnt ask, but if you start to circle the drain and nobody is wanting to invest, dont get desperate and take money from family, people you care about, or especially people who arent a professional VC. Youre going to be afraid to take the chances and leaps necessary to deliver a possible return on their money and success to your concept. Similarly, small VCs can be a hinderance in the way that you're their one horse, and bigger startups havent delivered the returns that would relax them into trusting their instinct and letting their investment be a catalyst rather than a shackle.
VC money is not like kickstarter where it means they have input. That is what board seats are for, and the more money people you put there, and the less industry people you put there, the harder it will be to explain industry concepts which frankly shouldnt be your job.
Dont take VC money for a game. Be broke for a while, work a job, grind it out in your free time. Youll thank yourself. Research Bay12games.