Question

Which one of the following statements concerning venture capital financing is incorrect? Multiple Choice Venture capitalists desire shares of common stock or preferred stock. Venture capital is relatively hard to obtain. Venture capitalists usually assume active roles in the management of the financed firm. Venture capitalists should have key contacts and financial strength. Venture capital is relatively inexpensive in today's competitive markets.

Answer 1

Answer:

The incorrect statement about Venture capitalists is:

Venture capitalists usually assume active roles in the management of the financed firm.

Explanation:

Venture capitalists are high net worth individuals with managerial competence or experience seeking for new businesses to invest in. In exchange, they ask for an equity stake in the company they finance.

Venture capital financing is the type of funds that are given to invested into viable businesses in their budding stage by investors that see long term growth potential in them. it is a form of private equity.

Venture Capitalist never assume active roles in the management of the financed firm. however, if they have the technical know how, they may pitch in passively from time to time to advice.