Venture Capitalists Provide fiNancing for New fiRms from the Seed

question 3

Multiple Choice

Venture capitalists provide financing for new firms from the seed and start-up stage all the way to mezzanine and bridge financing.In exchange for financing entrepreneurs give:

• A)a high interest rate debt instrument and control.
• B)an equity position and usually board of director positions.
• C)up the right to have an initial public offering.
• D)control to a court appointed trustee.
• E)hire the venture capitalists as CEOs and CFOs.

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Definitions:

Homeostasis

The ability of a living organism to maintain internal stability by adjusting its physiological processes.

Drive-Reduction

A theory of motivation that posits that behavior is driven by the need to reduce internal states of tension caused by unmet biological needs.

Incentive

A factor that motivates or encourages someone to do something, often linked to rewards or punishments.

Optimal Level

Pertains to the most favorable or advantageous level or stage of a process, activity, or variable.