Which term describes an agreement for a person or organization to own part of a company by providing start-up funds to the new business?

Which term describes an agreement for a person or organization to own part of a company by providing start-up funds to the new business?

• A. ERP
• B. Equity partnership
• C. ESOP
• D. Ethnocentrism

Answer: (B)

Ownership in exchange for capital is being tested. An equity partnership is the arrangement where someone provides start-up funds to a new business and, in return, acquires an ownership stake in the company. This setup means the investor gains a share of ownership and a stake in profits (and possibly some governance rights) proportional to their investment, rather than simply lending money. It’s the clearest fit for describing funding tied to ownership. ERP, by contrast, is about software for integrating business processes, not ownership. ESOP refers to a program that gives employees ownership through stock, usually funded and administered within an established company, not specifically a startup funding agreement. Ethnocentrism is an attitude about cultural superiority and has no relation to funding or ownership in a business.

Ownership in exchange for capital is being tested. An equity partnership is the arrangement where someone provides start-up funds to a new business and, in return, acquires an ownership stake in the company. This setup means the investor gains a share of ownership and a stake in profits (and possibly some governance rights) proportional to their investment, rather than simply lending money. It’s the clearest fit for describing funding tied to ownership.

ERP, by contrast, is about software for integrating business processes, not ownership. ESOP refers to a program that gives employees ownership through stock, usually funded and administered within an established company, not specifically a startup funding agreement. Ethnocentrism is an attitude about cultural superiority and has no relation to funding or ownership in a business.