Question

which of the following is true about venture capitalists? multiple select question. they only operate in international markets. they invest in businesses with high potential. they have assisted many major companies during start-up. they are a new method of raising capital in the u.s.

Answer 1

Venture capitalists invest in startups with high growth potential and offer more than just money, including strategic advice. They pool money from various investors and accept high risks for the chance of significant rewards. Venture capital is a well-established, albeit fluctuating, source of investment for early-stage companies.

Step-by-step explanation:

Venture capital firms are known for making significant financial investments in new and small companies that exhibit high potential for substantial growth. These firms pool resources from a variety of investors, such as banks, college endowments, insurance companies, and corporate pension funds. Venture capitalists not only supply capital but also offer strategic guidance on products, customers, and hiring. A venture capital fund spreads its investments across multiple startups, providing returns to investors based on the collective performance of these companies.

The understanding that many startups may fail, while a select few could become massively successful (such as Netflix or Amazon.com), venture capital firms are comfortable with taking significant risks to achieve potential high returns. It's not a new method of raising capital but has been instrumental in the success of many major companies during their early development stages. Venture capital investment is substantial and variable; for instance, in 2014, more than $48.3 billion was invested by these firms, as per the National Venture Capital Association.