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Questions
Answer the question in about one hundred and fifty words:
What are the features of venture capital finance?
State any four features of venture capital finance.
Solution
Venture capital finance has the following features:
- High Risk and High Return: Capital investments are typically made in early-stage and start-up businesses, which are very open to failure. However, they also present the possibility of large rewards if the business is successful and expands quickly.
- Equity Participation: Venture capitalists typically invest in equity or equity-linked securities. It means that they invest in the business. Sharing responsibility and frequently obtaining a voice in its strategic direction and management.
- Active Involvement: Frequently, venture capitalists offer more than simply money. They contribute their knowledge, contacts, and experience to support the company's expansion. This can involve help in areas like marketing, operations, financial planning, strategic direction, and mentoring.
- Long-Term Investment Horizon: The normal time horizon for venture capital investments is five to ten years. Before looking to exit the firm through an IPO, acquisition, or other means, investors are patient and ready to wait for it to "mature and achieve significant growth."
- Skills: Venture capitalists also have the business skills to invest in firms. This increases the chances of the emerging firm's success.
- Private equity: It is a subset of private equity.
Innovative and high-potential start-ups benefit greatly from venture capital, which gives them the financial resources and strategic support they need to expand and survive in cutthroat marketplaces.
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Entrepreneur can use the capital raised for a variety of purposes, what are they?
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An entrepreneur is a person who bears the risks, unites various factors of production and carries out a creative innovation, and for doing all these, what is the basic requirement to be reached to this extent.
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When an entrepreneur decides to go public and become a public company, he/ she tends to be in advantageous position and get many benefits out of it. Explain the benefits.
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What do you understand by venture capital?
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Enlist several categories of financing possibilities in which smaller ventures sometimes rely on.
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Why are venture capitalists typically very selective in deciding while doing the investment?
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When can an entrepreneur seek venture capital financing?
High Order Thinking Skills
Why it is said that “A venture capitalists investments are illiquid”. Give reason.
High Order Thinking Skills
“TFCI is playing vital role in the development of entrepreneurship in modern economy”. Comment.
Value Based Question
By offering shares to its employers what values are promoted by a company.
An entrepreneur may need the venture capitalist in the second stage of financing or as a source of bridge financing but he should always go in for due diligence before opting venture capital as a source of finance.
Comment on the given statement from the perspective of an entrepreneur.
The role of a venture capitalist in an organization is dependent on the stage at which an organization is being funded by the venture capitalist. Evaluate.
