Final answer:
A startup is a young company with high risk and potential for growth, where founders often invest their own money to show belief in its success. Angel investors and venture capitalists help mitigate risks by personally knowing the managers and advising based on the business plans.
Step-by-step explanation:
Definition of a Startup
According to what I've learned from Entrex, a startup is often a young company that represents a significant risk, as it could be just an initial concept yet to be fully developed. These startups are characterized by their potential for growth and the need for investment in their early stages. The founders of a startup demonstrate their own belief in the business by investing their personal funds, thereby taking on both financial risk and potential reward. In the world of startups, angel investors and venture capitalists play critical roles in helping overcome the challenges of imperfect information. They do this by building personal relationships with the managers and providing guidance based on the business plan presented, which reflects the concept of entrepreneurship encompassed within the willingness and innovation necessary to take the risk of starting a business.