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 should have key contacts and financial strength.
E) Venture capital is relatively inexpensive in today's competitive markets.

Question

Quizplus · Accepted Answer

Venture capitalists should have key contacts and financial strength to be able to provide not only funding but also strategic support, industry expertise, and networking opportunities to the financed firm. Venture capital financing is not easy to obtain, and venture capitalists typically prefer preferred stock over common stock. They also often take active roles in the management of the financed firm. Additionally, venture capital is generally more expensive than other forms of financing due to the higher risk involved.

Which One of the Following Statements Concerning Venture Capital Financing