CMA Final · Entrepreneurship and Startup · The Entrepreneurial Ecosystem
Kaveri Agritech, a Pune startup, has a working prototype and its first few paying pilot customers. It now needs funds of about Rs 6 crore to build sales and production capacity from an institutional investor that takes equity in return for a stake and board involvement. Which source best fits this description?
A venture capital fund fits best, because it provides institutional equity funding to early-stage high-growth firms in exchange for a stake and often board participation. Trade credit and overdrafts are short-term debt facilities, and donation crowdfunding offers no equity or governance role.
- AVenture capital fundCorrect
- BTrade credit from suppliers
- CBank overdraft against inventory
- DCrowdfunding through donations with no equity
Explanation
Venture capital funds invest institutional money in early, high-growth ventures in exchange for equity and often a board seat. Trade credit and overdrafts are debt-like working capital and carry no equity or board role; donation crowdfunding gives no stake.
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