Tactics that venture capitalists use to reduce the risk of their investment include:

Question

Quizplus · Accepted Answer

Venture capitalists typically reduce the risk of their investment by funding the venture in stages, requiring entrepreneurs to make personal investments (as a signal of commitment to the venture), syndicating investments with other VCs to spread the risk, and maintaining in-depth knowledge about the industry in which they specialize. Option A correctly describes these tactics, while option B is less common as it puts all the risk on the entrepreneur and gives them no incentive to focus on efficient use of capital. Option D is not correct as all venture capitalists use some combination of these tactics.

Tactics That Venture Capitalists Use to Reduce the Risk of Their