Knowee
Questions
Features
Study Tools

What is the primary source of funding for startups from venture capital firms?Bank loansEquity investmentCrowdfundingGovernment grants

Question

What is the primary source of funding for startups from venture capital firms?

  • Bank loans
  • Equity investment
  • Crowdfunding
  • Government grants
🧐 Not the exact question you are looking for?Go ask a question

Solution

To determine the primary source of funding for startups from venture capital firms, it's essential to understand what venture capital entails and the options available to startups.

Venture capital primarily involves equity investment, where investors provide capital to startups in exchange for ownership equity in the company. This funding is crucial for startups, especially in their early stages, as they often lack the historical performance or collateral to secure bank loans.

While crowdfunding and government grants are viable funding options, they don't typically represent the primary mechanism through which venture capital firms operate. Therefore, the correct answer to the question is:

Equity investment.

Equity investment is the main method by which venture capital firms financially support startups, enabling them to grow and scale their businesses in exchange for an ownership stake in return.

This problem has been solved

Similar Questions

Funding for entrepreneurs can only come from institutional sources like banks and venture capital firms.Group of answer choicesTrueFalse

What is the most common form of entrepreneurial financing for start-up businesses?

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

Which act as an intermediary to link up the sources of ideas and the sources of fund?a.Venture capitalb.Leasingc.None of thesed.Merchant banking

Debt is a suitable funding source for non-profitable entrepreneurial ventures.Group of answer choicesTrueFalse

1/3

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.