Answer to Question 1
Most venture capital firms do not invest in the typical small business. Instead, they invest in small (and sometimes struggling) firms that have the potential to become very successful and very profitable. Today, venture capital firms invest in companies that build the nation's infrastructure, develop computer software, or provide consumer information or social media services. Private placement, on the other hand, sells stock and other corporate securities directly to insurance companies, pension funds, or large institutional investors. When compared with selling stocks and other corporate securities to the public, there are fewer government regulations and the cost is generally less when securities are sold through a private placement.
Answer to Question 2
False