Which one of the following statements concerning venture capitalists is correct?
A)Venture capitalists assume management responsibility for the firms they finance.
B)Exit strategy is a key consideration when selecting a venture capitalist.
C)Venture capitalists limit their services to providing money to start-up firms.
D)Most venture capitalists are long-term investors in a firm.
E)A venture capitalist normally invests in a new idea and finances that idea until the newly-formed firm can issue an IPO.

Question

Quizplus · Accepted Answer

Exit strategy is an important consideration for venture capitalists because they want to know how they will eventually profit from their investment. They may seek to exit the investment through means like selling the company or going public with an IPO. The other options are incorrect: A - venture capitalists generally do not assume management responsibility for the firms they finance; C - venture capitalists often provide additional services beyond just providing money; D - venture capitalists may be short-term or long-term investors depending on their goals and the specific investment; E - venture capitalists often invest beyond just the initial idea stage and may provide financing throughout various stages of growth.

Which One of the Following Statements Concerning Venture Capitalists Is