Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
9th Edition
ISBN: 9781259277214
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
Question
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Chapter 15, Problem 15.1C
Summary Introduction

To think critically about: The considerations when choosing between venture capitalists.

Introduction:

Start-up companies are financed by a market that funds new, often high-risk ventures and this market is termed as the venture capital market. The capital that is provided to the firm is the venture capital. An investor who either gives capital to the start-up or supports the expansion of the company is a venture capitalist.

Expert Solution & Answer
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Explanation of Solution

The various considerations in selecting the venture capitalist that are significant are as follows:

  • The financial strength of the venture capitalist.
  • The style of the venture capitalist.
  • The references of the venture capitalist.
  • The strategy for exit by the venture capitalist.
  • The contacts of the venture capitalist.
Conclusion

Venture capitals are mainly beneficial to start-up companies. A huge payoff for the success of start-up companies is mainly possible from two cases: when the company goes public or when the company is sold to another company.

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