Which one of the following statements concerning venture capital financing is correct?
A)Venture capitalists desire shares of common stock but avoid preferred stock.
B)Venture capital is relatively easy to obtain.
C)Venture capitalists rarely assume active roles in the management of the financed firm.
D)Venture capitalists often require at least a forty percent equity position as a condition of financing.
E)Venture capital is relatively inexpensive in today's competitive markets.

Question

Quizplus · Accepted Answer

Venture capitalists often require at least a forty percent equity position as a condition of financing. This allows them to have significant control over the company and its direction. The other options are incorrect as venture capitalists usually prefer preferred stock over common stock, venture capital is not easy to obtain, venture capitalists often assume active roles in management, and venture capital is expensive due to the high risk involved.

Which One of the Following Statements Concerning Venture Capital Financing