CMAT 2025 Slot 1 Question Paper

Venture capital financing is a type of private equity investing specific to earlier-stage businesses that require capital. In return, the investor receives an equity stake in the business through the issuance of some type of security instrument. The financing is naturally high risk as the involved businesses are still in the nascent stage.

Statements A and B both align with the summary above. Statement C talks about blue-chip companies and is irrelevant. Statement D also aligns with the discussion on high risk. Statement E narrows down the ambit of venture capital financing to technology projects, and is wrong. 

The correct answer is option B.

Option A, although not the definition of an entrepreneur, captures the core drive of an entrepreneur. Options B and C are incorrect; an entrepreneur neither works for a firm nor a company, nor takes instructions as a subordinate. Option D, although somewhat true, is not true exclusively of entrepreneurs. The correct answer is option A.

Equity financing is the process of raising capital for a business by selling shares of ownership to investors. A strategic alliance is a formal agreement between two or more independent companies to work together and share resources to achieve common business objectives. An entrepreneurial mindset requires cultivating innovative ideas that are feasible, useful, and original. A break-even point refers to a point where the cost-to-revenue ratio is 1:1, i.e. when there's no profit or loss.

The correct pairings, therefore, are

1. Equity Financing: Selling ownership shares
2. Strategic Alliance: Partnership for mutual shares
3. Entrepreneurial mindset: Innovative thinking
   
4. Break-even point: No profit, no loss.

Option C is the correct answer.

The Lean Startup method is a strategy in product development that relies on rapid iteration, validated learning, and customer feedback to determine if a business model is viable and to reduce risk. Statement I is clearly false as it goes against rapid iteration. Statement II is true. The core of the lean startup method is the "Build-Measure-Learn" feedback loop, where a company builds a minimum viable product (MVP), measures its performance with real customers, and learns from the results to decide whether to improve or "pivot" the product or business plan. Therefore, the correct answer is option D.

Let's define each of the terms in the options as follows: 

1. Series Funding: A structured, multi-stage process where a startup company raises capital from investors through a series of funding rounds.
2. Angel Investment: An individual who provides capital to a budding business or businesses, including early startups, usually in exchange for convertible debt or ownership equity. 
3. Corporate bonds: Debt securities issued by companies to raise capital for various purposes, such as expansion or operational costs. When an investor buys a bond, they are lending money to the company and, in return, receive regular interest payments (coupons) and the return of the principal.
4. Initial Public Offering (IPO): An IPO (initial public offering) is the first time a business raises finance publicly. Before that, it can only use private investment.

The most suitable answer for "funding sources is specifically aimed at helping early-stage startups" is option B, 'angel investment'.

Cost-benefit analysis is a systematic approach to estimating the strengths and weaknesses of alternatives. It is used to determine options that provide the best approach to achieving benefits while preserving savings in, for example, transactions, activities, and functional business requirements.

An understanding of transport projects as least affected by other factors and most by cost-to-revenue ratios would underscore the importance of CBA. Statements I and II are both correct. The correct answer, therefore, is option A.

Feasibility analysis involves assessing a business idea in detail to determine whether or not it is viable. It consists of studying costs and activities required to set up and run a business, and how to make an informed decision about whether to start a business (based on its viability) and how to do it (based on both viability conditions and costs).

Statements (A) and (B) follow the idea of feasibility as discussed above and are both correct. Statement (C) mentions time span, which is irrelevant. Statement (D) talks about performance and is also unrelated to feasibility. Sentence (E) discusses strategy and is also irrelevant.

The correct answer, therefore, is option C.

Creativity is employing original ideas in creating something worthwhile. If a process is not useful, however novel the idea may be, it can pass off as imagination. In essence, 'usefulness' in this context can be defined as being a combination of feasibility and impact. In a business or entrepreneurship context, creativity can lead to the birth of new products or new startups, which are both valuable. Statement I is correct.

Statement I highlights the definitive meanings of creativity. Statement II dives into what influences creativity. It mentions creativity to be a "complicated and multidimensional concept with many components," influenced by knowledge, cognition, personality, intelligence and motivation. These are all factors that also influence individual capacity for thought, and by implication, creativity. Statement II is also correct. 

The correct answer, therefore, is option A.

A Fabian entrepreneur is an entrepreneur who is cautious and sceptical of new or innovative ways of doing business or is reserved in adopting new technology. This is best captured in B, which is the correct answer.