Joseph Coulter needs long-term financing for his company. He contacts Funders Group, which is willing to provide funding in exchange for an ownership stake, an active role in management of Joseph's company, and an opportunity for a large return on its investment. Funders Group is offering ________ capital.

Question

A) debenture
B) venture
C) leverage
D) retained
E) certificate

Answer 1

B
Explanation: B) Venture capital is an investment in the form of money that includes a substantial amount of risk for investors. Because of the high level of risk, the group of outside investors, called venture capitalists, commands an active role in a company's management decisions. Venture capitalists seek their return in the form of equity, or ownership, in a company. They anticipate a large return on their investment when the company is sold or goes public. Venture capitalists are willing to wait longer than other investors, lenders, or shareholders for returns on their investments, but they expect higher than normal results.