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      Question

      Which of the following most accurately defines venture

      capital investment?
      A Capital invested as debt with moderate risk, usually in MSME businesses Correct Answer Incorrect Answer
      B Capital provided as bridge funding until equity is raised for the project Correct Answer Incorrect Answer
      C Capital invested in new or expanding businesses with substantial risk and high growth potential Correct Answer Incorrect Answer
      D Capital deployed in established businesses with low risk Correct Answer Incorrect Answer
      E All of the above Correct Answer Incorrect Answer

      Solution

      • Venture Capital (VC) is a type of private equity financing provided to startups, early-stage, or expanding businesses that are perceived to have high growth potential. • Unlike traditional debt, VC involves equity participation, meaning investors share ownership and potential profits. • Venture capital carries a high degree of risk, since new ventures often face uncertainties, but also offers the chance of high returns if the business succeeds. • It is typically long-term funding, often coupled with strategic guidance and mentoring by the investors.

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