What does venture capital mean?
- (a) A short-term capital provided to industries
- (b) A long-term start-up capital provided to new entrepreneurs ✓ UPSC's answer
- (c) Funds provided to industries at times of incurring losses
- (d) Funds provided for replacement and renovation of industries
Why the answer is (b)
• Venture capital is long-term equity finance provided by investors to early-stage, high-potential start-ups in exchange for a share of ownership, accepting high risk for the chance of high returns — option (b).
• It is not short-term working capital (a), loss-time rescue funding (c) or funds for replacing old machinery (d).
• Hence option (b).
Why the other options are wrong
- (a) A short-term capital provided to industries
- Venture capital is long-term, not short-term.
- (c) Funds provided to industries at times of incurring losses
- It funds growth, not loss-making rescue.
- (d) Funds provided for replacement and renovation of industries
- It is not for replacement or renovation.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2014, held on 24 August 2014. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.