In the hope of high returns, venture capitalists provide funds to finance new (start up) companies

Marketing Jan 13, 2021

In the hope of high returns, venture capitalists provide funds to finance new (start up) companies. However, potential competitors and structures of the market into which the new firm enters are extremely important in realization of profits.

Among different market structures, which provides the highest possible return for a new company and why?

Expert Solution

Startups that will start as a monopoly are most attractive to venture capitalists because they don't need to face competition early in the life of the company to survive. Monopolies are profitable both because the lack of competition allows it to reach the entire market but also because it has the power to set prices.

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