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Venture Capital MCQs

Why does a venture capital firm require a substantial amount of equity for the investment?

According to the risk — reward concept, they deserve a large return on their investment as they are taking on a substantial risk.

Because they control the negotiations and hold companies hostage for getting more equity.

Because they are allowed by law to hold as much as possible.

Because it reduces their tax implications through holding more investment.

Answer

Correct Answer: According to the risk — reward concept, they deserve a large return on their investment as they are taking on a substantial risk.

Explanation:

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