What does venture capital mean?

[amp_mcq option1=”A short-term capital provided to industries” option2=”A long-term start-up capital provided to new entrepreneurs” option3=”Funds provided to industries at times of incurring losses” option4=”Funds provided for replacement and renovation of industries” correct=”option2″]

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UPSC IAS – 2014

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The correct option is B. Venture capital means a long-term start-up capital provided to new entrepreneurs.

Venture capital is a form of private equity financing that is provided by venture capital firms or funds to start-ups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth. It is characterized by being a long-term investment, usually in equity, and is provided to fund initial operations or expansions of new ventures.

Venture capital is typically associated with high risk due to the early stage of the companies invested in, but it offers the potential for proportionally high returns if the ventures are successful. It is not short-term capital, nor is it primarily intended for companies already incurring losses (though start-ups often do in their early phase) or for replacement/renovation of established industries.

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