Practicing Success

Target Exam

CUET

Subject

Entrepreneurship

Chapter

Entrepreneurial Opportunity

Question:

Sudha has just passed her class XII with 90% marks and was to start her own business but was unable to decide about the nature of business. Her friend, Sumita suggested her to seek professional help.

One day during the morning walk her grandmother fell down in park. She observed that her grandmother often forgets to take her medicines. She thought that the same problem might be faced by other old people. She got an idea from here to start a business, to develop an instrument for old people that could be fitted with an electronic device connected to the mobile phones of members of their family which could indicate the location of old people when they go outside their homes. This device was to be kept in their pockets. She also thought to fit a timer in the instrument that could remind the old persons about the time of taking their medicines. She also made it a point to observe her grandmother sometimes during the morning walk to see the functioning of the device. Sudha also studied pros and cons of production before launching it.

She contacted a professional, Sanjay, as advised by her friend, and asked him to give his valuable technical assistance and capital to finance her ideas.

Identify the source of funding used by Sudha in the above paragraph.

Options:

Secondary Market

Primary Market

Venture Capital

Angel Investor

Correct Answer:

Angel Investor

Explanation:

The source of funding used by Sudha in the above paragraph is Angel Investor.

Sudha is seeking funding from a professional, Sanjay, who is providing both technical assistance and capital. This type of funding is typically provided by angel investors, who are wealthy individuals who invest their own money in early-stage startups. Angel investors are often experienced entrepreneurs who can provide valuable mentorship and guidance in addition to financial support.

The other options are not suitable because:

  • Secondary Market: The secondary market is where securities are traded after they have been issued. Sudha is not looking to buy or sell existing securities, but to raise new capital for her startup.
  • Primary Market: The primary market is where securities are initially issued to the public. Sudha is not looking to issue securities to the public, but to raise capital from a private investor.
  • Venture Capital: Venture capital firms invest in high-growth, early-stage companies. While Sudha's company has the potential for high growth, it is not yet at the stage where it would be attractive to venture capital firms.

Therefore, the most appropriate source of funding for Sudha's company is an angel investor.