Venture Capital MCQ — 92 Practice Questions with Answers

Q1. Consider the following statements about angel funds and angel investors under SEBI's AIF framework: 1. An angel fund is a sub-category of Venture Capital Fund under Category I AIF. 2. An individual angel investor must have net tangible assets of at least one crore rupees, excluding the value of the principal residence. 3. A body corporate can qualify as an angel investor if it has a net worth of at least ten crore rupees. Which of the statements given above are correct?

Q2. Consider the following statements about tenure, leverage and concentration limits for AIFs: 1. Category I and Category II AIFs must be close-ended and have a minimum tenure of three years. 2. Category III AIFs may be open-ended or close-ended. 3. Category I AIFs can borrow for temporary funding needs only within the limits of 30 days, four occasions in a year and 10 percent of corpus. 4. Category I and II AIFs may invest up to 50 percent of their corpus in one investee company. Which of the statements given above are correct?

Q3. Consider the following statements about exit routes for startup investors: 1. Venture capital and private equity funds must exit all their investments before the end of the fund's life. 2. An IPO is the first time that the stock of a private company is offered to the public. 3. Founders are never allowed to buy back shares from fund investors. Which of the statements given above are correct?

Q4. Consider the following statements about venture capital and fund-of-funds channels in India: 1. The Fund of Funds for Startups directly invests in individual startups instead of providing capital to AIFs. 2. Category III AIFs are prohibited from employing leverage through derivatives. 3. A venture capital fund primarily invests in listed government securities rather than start-ups or early-stage undertakings. Which of the statements given above are correct?

Q5. 1. Startup India FoF 2.0 is implemented through commitments to SEBI-registered Category I and II AIFs. 2. These AIFs will invest in DPIIT-recognised startups. 3. The scheme is implemented only through Category III AIFs trading in listed derivatives. Which of the statements given above are correct?