Final answer:
Founders often contribute personal funds and sweat equity as investments in their startups, showing their belief in the company's potential and helping to attract investors. The correct answer is e. sweat equity.
Step-by-step explanation:
The vast majority of founders contribute personal funds along with sweat equity to their ventures. Sweat equity refers to the non-monetary investment that founders and team members put into a startup, such as hard work, effort, and time. Founders who invest their own funds and hard work into a new business do so as a sign of confidence in the startup's potential. It's common practice for startup owners to dip into personal savings or assets.
Moreover, angel investors and venture capitalists look for commitment from founders in the form of capital investment and sweat equity to gauge the probability of success. This personal investment decision also helps investors overcome information asymmetry, as founders typically have a better understanding of the potential and the necessary dedication for the startup's success compared to outside investors. The correct answer is e. sweat equity.