technologies. are best described as equity investments by large established firms making in entrepreneurial ventures to gain access to new, and potentially disruptive, O Corporate venture capital investments O Greenfield ventures O Joint ventures O Loan sharks
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A venture capital firmSelect one:a. consists of a pool of investors, or a family partnership, or corporations with money to invest.b. looks for business that will provide a steady, average return.c. receives corporate bonds from firms it finances.d. is a large, diversified corporation looking for investment opportunities.e. provides financing to only large businesses.
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3 . Individual Problems 21-5 Venture capital (VC) firms are pools of private capital that typically invest in small, fast-growing companies that can't raise funds through other means. In exchange for this financing, VCs receive a share of a company's equity, and the founders of the firm typically stay on and continue to manage the company. The incentive conflict is between the managers, who are the , and venture capitalists, who are the . VC investments have two typical components: (1) managers maintain some ownership in the company and often earn additional equity if the company performs well; (2) VCs demand seats on the company's board. Management ownership serves to the alignment of the incentives of managers with the incentives of owners.
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