Question

The term bootstrapping is often associated with
1. Startups
2. Venture Capital Funds
3. Financial institutions
4. Non-banking Financial Institutions

Answer 1

Correct Answer - Option 1 : Startups

The correct answer is startups.

• Bootstrapping describes a situation in which an entrepreneur starts a company with little capital, relying on money other than outside investments.
  • Bootstrapping is founding and running a company using only personal finances or operating revenue.
  • It allows the entrepreneur to maintain more control, but it also can increase financial strain.
  • It occurs when a business owner starts a company with little to no assets.

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• Venture capital funds are pooled investment funds that manage the money of investors who seek private equity stakes in startups and small- to medium-sized enterprises with strong growth potential.
  • These investments are generally characterized as very high-risk/high-return opportunities.
• A financial institution (FI) is a company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange.
  • It encompasses banks, trust companies, insurance companies, brokerage firms, and investment dealers.
• A nonbank financial institution (NBFI) is a financial institution that does not have a full banking license and cannot accept deposits from the public.
  •  NBFIs do facilitate alternative financial services, such as investment (both collective and individual), risk pooling, financial consulting, brokering, money transmission, and cashing the check.
  • They include insurance firms, venture capitalists, currency exchanges, some microloan organizations, and pawn shops.