What is venture capital investment?a)A loan provided to business firms by financial institutionsb)Financing provided to risky projects with promising future prospectsc)Investment in government bonds and securitiesd)Funding provided to established business enterprisesCorrect answer is option 'B'. Can you explain this answer?

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Answer

Venture capital investment refers to the financing provided to business firms that are considered risky but have a promising future prospect. It is a form of funding that focuses on technology-based or innovative business enterprises. Unlike traditional loans, venture capital is invested as equity shares rather than as a loan, making it a form of risk capital. This type of investment is suited for businesses that have the potential to grow in the near future and are willing to take on high-risk projects. The investment is typically held for a long period of time, ranging from two to ten years. Once the funding is provided, the investor remains actively involved in the business. Venture capital has emerged as a popular financing alternative in many countries, including the United States and India.

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