QUESTION IMAGE
Question
which of the following is true of venture capital?
- on average, venture capital investors seek a return on their investment in about five years.
- venture capital is comparable to a bank loan, which must be repaid over time.
- venture capitalists typically sell their portion of company res before an ipo or the sale of the company.
- e way venture capitalists evaluate potential estments is by analyzing a companys share price.
Brief Explanations
- Analyze each option:
- Option 1: Venture capital investors typically aim for a return in around 5 - 7 years, so "about five years" is reasonable.
- Option 2: Venture capital is equity financing, not a loan (no repayment obligation like a bank loan), so this is false.
- Option 3: Venture capitalists usually exit (sell shares) during IPO or company sale, not before, so false.
- Option 4: Venture - backed companies are often private (no share price), so analyzing share price is not a way they evaluate, false.
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A. On average, venture capital investors seek a return on their investment in about five years.