Economics · Venture Capital Instruments and Financial Concepts

Consider the following statements regarding investment instruments and venture capital dynamics: Statement 1: Angel investors are typically high-net-worth individuals who invest their own capital in the early seed stages, whereas venture capitalists manage pooled institutional funds. Statement 2: A term sheet outlines the fundamental terms of investment, containing mostly non-binding clauses, except for provisions like confidentiality and exclusivity which are legally binding. Statement 3: Convertible notes are short-term debt instruments converting into equity during a future financing round, often featuring a valuation cap and a discount rate. Statement 4: The J-Curve effect in private equity reflects the tendency of a fund to yield negative returns in its initial years due to upfront fees and early investment failures, followed by gains as investments mature. Which of the following options correctly evaluates these statements?