Civil Services Prep

Prelims 2014 · Economy · Question 8

What does venture capital mean?

  1. A short-term capital provided to industries
  2. A long-term start-up capital provided to new entrepreneurs
  3. Funds provided to industries at times of incurring losses
  4. Funds provided for replacement and renovation of industries

Answer

A long-term start-up capital provided to new entrepreneurs

  • (a) Venture capital is not short-term capital; it is typically medium- to long-term risk capital. Incorrect.
  • (b) Venture capital means long-term risk/start-up capital given to new entrepreneurs or innovative firms with high growth potential. Correct.
  • (c) It is not mainly meant to bail out loss-making industries; it finances promising new ventures. Incorrect.
  • (d) It is not for replacement or renovation of existing industries; that is not the core purpose of venture capital. Incorrect.
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