DECA Sports and Entertainment Marketing Practice Exam

What is venture capital?

1. Money earned from event ticket sales

2. Funding from investors in exchange for ownership in a startup

3. The earnings from a viral marketing campaign

4. A method used for pricing strategies

The correct answer is: Funding from investors in exchange for ownership in a startup

Venture capital refers to funding provided by investors to startup companies and small businesses that are deemed to have high growth potential. In exchange for this financial support, investors receive equity, or ownership stakes, in the business. This arrangement is beneficial for both parties: the startup gains necessary funds to expand and develop its operations, while the investors have the opportunity to earn significant returns if the company succeeds. Venture capital is particularly important in the context of innovative sectors where traditional financing may not be as readily available. The other options represent different financial concepts but do not capture the essence of venture capital. For instance, money earned from event ticket sales pertains to revenue generated from events, earnings from a viral marketing campaign references profits that may come from effective promotional strategies, and a method used for pricing strategies relates to how businesses determine the price points of their offerings. None of these options involve the investment and ownership exchange that characterizes venture capital.