Question

Venture capitalists can reduce their risk by:

		Requiring the entrepreneur to personally invest as well.
		In-depth knowledge of the industry or market sector.
		Staging their investment.
		All of the above.

Answer 1

Venture capitalists can reduce their risk by All of the three:

Requiring the entrepreneur to personally invest as well: This will make entreprenuer to take personal interest in working of the venture capital business and he will be more cautious in making decisions.

In depth knowledge of the industry or market sector: venture capitalists should acquire indepth knowledge of the industry of market sector as market size, competitive advantage, assessing chances of success rate of business etc.

Staging their investment: Instead of investing all the funds at one time, investment can be made in stages so that progress of the project can be monitored.