Skip to content

CS Professional · Strategic Management and Corporate Finance · Raising of Funds - Private Funding

Which of the following is the best example of a source of private funding for a start-up company such as an Indian technology firm in its early growth phase?

Investment by a venture capital fund through a negotiated subscription is private funding. The fund invests directly in an unlisted start-up on agreed terms, whereas IPOs, follow-on public offers and public rights issues are public-market routes aimed at a wide investor base.

  1. AAn initial public offer with retail quota through a stock exchange
  2. BA rights issue by a listed company to its existing public shareholders
  3. CInvestment by a venture capital fund through a negotiated subscription to its sharesCorrect
  4. DA follow-on public offer made with a red herring prospectus

Explanation

Venture capital funds invest directly in unlisted companies through negotiated deals, which is private funding. The IPO, rights issue by a listed company and follow-on public offer are public-market routes with prospectus-based disclosure to a wide investor base.

Did you get it right without looking?

One question tells you little. A timed set on Raising of Funds - Private Funding shows your real accuracy, how long you take and where you lose marks.

Practise Raising of Funds - Private FundingFree diagnostic mock

More Raising of Funds - Private Funding questions