When new ventures are very young,they rarely obtain debt financing and tend to obtain equity financing instead.

Question

Quizplus · Accepted Answer

This is true because new ventures usually do not have a proven track record or a lot of assets to use as collateral, making it difficult to obtain debt financing. Equity financing, on the other hand, allows the business to raise funds from investors in exchange for a share of ownership in the company. This can be an attractive option for young ventures as they work towards establishing themselves and building their business.

When New Ventures Are Very Young,they Rarely Obtain Debt Financing