Which capital is generally the largest of the venture capital fund-raising rounds?

A) start-up capital
B) development capital
C) expansion capital
D) exit

Question

Which capital is generally the largest of the venture capital fund-raising rounds?

A) start-up capital
B) development capital
C) expansion capital
D) exit

Quizplus · Accepted Answer

Expansion capital is typically the largest of the venture capital fund-raising rounds,and can be in the vicinity of $5 million to $10 million.Again,investors from the first two rounds will be invited to make a further contribution.However,given the larger pool of capital sought,the expansion round might bring in new investors.At this stage,the entrepreneur's share of equity has decreased markedly.There is a difficult balance to be reached at this stage.The venture capitalists know that the business is still reliant on the entrepreneur,and hence they need to allow the entrepreneur to maintain an equity stake sufficient to provide incentive to keep business momentum.However,the venture capitalists also seek increasing stakes of the business to compensate them for what can now be a substantial investment.

Which Capital Is Generally the Largest of the Venture Capital