Venture capitalists (VCs) receive money from investors and use it to fund entrepreneurs by investing in...

 

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Venture capitalists (VCs) receive money from investors and use it to fund entrepreneurs by investing in equity in start up businesses and, after a few years, selling that equity to make a profit. They receive two types of income, (i) 2% of the fund they are investing as a management fee (ii) 20% of the profit. Typically, a VC is investing in multiple businesses at any given time. For five different VCs, the income last year was: VC Management Fee (Sm) Profit (Sm) A 1.2 12.0 B 3.4 23.0 C 3.2 2.8 8.2 16.5 a. Which VC is managing the largest fund? How can you tell? b. Which VCs have 100% of their income from the management fee? Why would this be? c. What percentage of VC B's income comes from profits? d. Draw a graph comparing the 5 VCs income and how it is split between management fee and profit. Venture capitalists (VCs) receive money from investors and use it to fund entrepreneurs by investing in equity in start up businesses and, after a few years, selling that equity to make a profit. They receive two types of income, (i) 2% of the fund they are investing as a management fee (ii) 20% of the profit. Typically, a VC is investing in multiple businesses at any given time. For five different VCs, the income last year was: VC Management Fee (Sm) Profit (Sm) A 1.2 12.0 B 3.4 23.0 C 3.2 2.8 8.2 16.5 a. Which VC is managing the largest fund? How can you tell? b. Which VCs have 100% of their income from the management fee? Why would this be? c. What percentage of VC B's income comes from profits? d. Draw a graph comparing the 5 VCs income and how it is split between management fee and profit.