Which ONE of the following statements is true about using venture capital as a source of finance to start up a business?
Select ONE answer only:
- Venture capital is often used to raise small sums of money (e.g. up to £10,000)
- Venture capital firms often provide expert management support
- Venture capital is simple and quick to arrange
- Venture capital does not dilute ownership and control
- Venture capital firms want a relatively quick return
Name one other source of finance for start-up businesses:
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This is multiple choice question is suitable for Business Studies KS4 classes.
The answer is 5 – Venture capital is supplied by merchant and specialised commercial banks or venture capital firms. It can be complex and time-consuming to arrange – requiring presentation of an in-depth business plan with detailed financial forecasts. Most venture capitalists are only interested in loans of £50,000 plus, and some of £250,000 plus. Most expect to take a minority shareholding in the business for a set period and to appoint a non-executive director who can provide informed financial and managerial advice and contribute to major decisions.
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