Which one of the following statements is NOT true? Select one: A. Venture capitalists often require...

Which one of the following statements is NOT true?

Select one:

A. Venture capitalists often require an entrepreneur to make a substantial personal investment in the business.

B. Venture capitalists do not require an entrepreneur to make a personal investment in the business.

C. Venture capitalist's in-depth knowledge of the industry and technology reduces risk.

D. The key idea behind staged funding is that each funding stage gives the venture capitalist an opportunity to reassess the management team and the company's financial performance

Expert Solution

A. Is not the answer. The statement is true but the answer required is which is not true. Venture capitalists do require an entrepreneur to have skin in the game, meaning the entrepreneur should have substantial personal investment. This reduces the risk for venture capitalists and ensures that the entrepreneur works hard to make the business successful.

B. Is the answer. As explanined above. If entrepreneur doesn't have own investment,then risk for venture capitalists would increase.

C. Is not the answer. It is true. Venture capitalists invest in a lot of businesses and gain experience of the industry. Their knowledge reduces risk. They can give better guidance.

D. Is not the answer. Stage funding gives a little time for venture capitalists to assess the important parameters of business. If performance is good then venture capitalists can increase the investments. Stage funding helps in short term performance motivations for the start up. Risk reduces of venture capitalists with stage funding and business if performs well then it continues to get funding. This is also true but answer requires which is not true.

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jeff jeffy answered 1 year ago

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