Venture Capitalists

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Question

Which best describes venture capitalists?

Answers

A. They typically exert control over a firm so it will generate required returns.

B. They usually will fire the management team of the entrepreneurial firm and replace with their own management team.

C. They are typically passive investors and invest in a company because they like the management team.

D. They will only invest in a firm that will provide a return of 100%+ when they cash out.

E. They will structure financing to the liking of the entrepreneur so that the company has a better opportunity to grow. C

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Explanations

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A. B. C. D. E.

Explanation

Most venture capitalists, however, have no desire to control a venture. The main reason they invest in a company in the first place is because they like the management team. Venture capitalists are typically passive investors and experts in financing companies, structuring deals and advising management on important long-term decisions.

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