Venture Capital Statements
CMAT 2026 · Innovation & Entrepreneurship · Medium · Innovation and Entrepreneurship
Given below are two statements:
Statement I: Venture capital funds should always specialize narrowly in a single sector to maximise returns. Statement II: Diversification across industries and stages helps venture capitalists to manage portfolio risk, while maintaining strategic focus.
In light of the above statements, choose the most appropriate answer from the options given below:
- A.
Both Statement I and Statement II are correct
- B.
Both Statement I and Statement II are incorrect
- C.
Statement I is correct but Statement II is incorrect
- D.
Statement I is incorrect but Statement II is correct
D
Explanation
Statement I is incorrect because narrow sector specialization increases concentration risk. Statement II is correct as diversification across stages and sectors mitigates portfolio risk.
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