Venture capital firms provide debt funding so the entrepreneur will not have to give up equity.Group of answer choicesTrueFalse

The statement is False.

Venture capital firms primarily provide equity funding, not debt funding. They invest in startups and early-stage companies in exchange for ownership stakes (equity) in the business. This approach allows entrepreneurs to access critical funds without the immediate pressure of debt repayment. Instead of receiving a loan that must be repaid with interest, entrepreneurs benefit from the expertise and mentorship of venture capitalists, who typically seek to grow the business and eventually exit through a sale or public offering.

While some venture capital firms may engage in convertible debt arrangements or later-stage financing where some debt might be involved, the core of venture capital funding is equity investment. Thus, the general practice is that entrepreneurs usually give up a portion of their equity for venture capital funding.