Question

Carlos plans to start a business related to upcoming technologies. He expects rapid growth in his business venture. Although the risk is high, the
potential returns are high as well. Which source of finance might be apt for Carlos to fund his business?


A venture capitalists


angel investors


OC banks


OD. Initial Public Offering (IPO)

Answer 1

Answer:

A. Venture capitalists.

Explanation:

Venture capitalists are private investment firms that makes available funding to start up companies which shows traits of rapid growth, high potential returns while also maintaining a stake in the company. The aim of venture capitalists is to receive high return on their investment in the long run.

The risk involved in being a venture capitalist is high hence they look out for growth potential in would be borrowers while also earning huge profit on successful borrowers in the long run.

Venture capitalist recoup their investment either by receiving fees on the funding provided, earn interest on the funding or have an equity stake in the company that obtained the funding.

The source of finance that would be apt for Carlos to fund is business is venture capitalists.