Question

Venture Capital financing is _______
(A) Type of financing by venture capital. 
(B) It is private equity capital provided as seed funding to early stage. 
(C) Investment in blue chip companies for assured return. 
(D) It is a high risk investment made with an intention of creating high returns. 
(E) Done in technology projects only. 
Choose the correct answer from the options given below : 
 

• A. (A), (B), (D) and (E) only are correct statements.
• B. (A), (B) and (D) only are correct statements.
• C. (B), (C) and (D) only are correct statements.
• D. (C), (D) and (E) only are correct statements.

Hint:

VC = High Risk + High Potential Return + Early Stage. If a statement mentions "assured returns" or "low risk", it is definitely not about Venture Capital.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
Venture Capital (VC) is a form of private equity and a type of financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.
Step 2: Detailed Explanation:
1. Statement (A): True, it is the definition of the type of financing.
2. Statement (B): True, VCs often provide the initial capital (seed funding) needed to start or expand an early-stage company.
3. Statement (C): False, VCs invest in high-growth startups, not "blue chip" companies (which are established, stable giants like Reliance or Tata). VCs do not have "assured" returns; they face high failure rates.
4. Statement (D): True, VC is inherently high-risk because most startups fail, but the few that succeed provide exponentially high returns.
5. Statement (E): False, while tech is a major focus, VCs also invest in healthcare, biotech, clean energy, and consumer goods. It is not restricted to technology only.
Step 3: Final Answer:
Only (A), (B), and (D) are correct descriptors of Venture Capital financing.