Question

A ____________ is a professional money manager who makes risk investment in business aiming to obtain high rate of return on investments.

• A. Buyer
• B. Customer
• C. Venture capitalist
• D. Crowdfunder

Hint:

Venture capital operates on the power law:
A small percentage of investments generate the majority of portfolio returns.
This structure requires VCs to seek high-risk, high-reward opportunities.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
Startups require external financing to scale during early growth stages.
Various financial intermediaries offer capital depending on risk appetite and investment horizons.
Detailed Explanation:
Let us define the options:
- Buyer Customer: These are transacting parties.
They purchase goods and services for consumption, not financial investments.
- Venture Capitalist (VC): A VC is a professional manager of pooled capital.
They invest in high-risk, early-stage, high-growth startups in exchange for equity.
Their business model accepts a high failure rate in exchange for a high rate of return on successful exits.
Thus, this matches the definition.
- Crowdfunder: A crowdfunder is typically an individual.
They pool small sums of money, often via online platforms.
They do not act as professional fund managers.

Step 2: Final Answer:
A venture capitalist is a professional money manager who makes risky investments for high returns.