What does venture capital mean?

Venture capital is long-term, high-risk equity or equity-linked finance put into new and young enterprises that have a promising idea but no track record or collateral to borrow against. So B is correct.

• A is wrong: venture capital is the opposite of short-term. Investors typically stay invested for about 3 to 7 years and earn returns when the company grows or is sold or listed.
• C is wrong: funding for losses is working capital or a bridge loan. It is not venture capital, and a loss-making firm is not automatically a venture-backed start-up.
• D is wrong: funds for replacement and modernisation are term loans or capital expenditure finance for existing units, usually from banks and development institutions such as IDBI or SIDBI.

The core concept is the risk-return link: investors accept high failure risk in exchange for a share of the upside. In regulation, SEBI's Alternative Investment Fund Regulations, 2012 classify VC funds as Category I AIFs. For Mains, this connects to Startup India (2016), the role of innovation in employment, and the policy debate on whether public money can crowd in private risk capital.

Trap: aspirants see the word "capital" and pick a loan-type option. Venture capital is equity-like, long-term and risky, not a loan for losses or for machinery replacement.