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The Advantages And Disadvantages Of Venture Capital

By Donna Scott


When is the right time for you to start a business? Well, there is no actual time for everyone to begin. No matter what the status of economy has turned, any time can be a good moment to start. Nevertheless, you really need to make some plans as you work on it and answer some questions like what your qualifications are, what type of product you would venture and many more. Most would really think about new and unique ideas which are better than anyone. However, those ideas will still be futile if it requires some funding, which you currently do not have. As a result, you may rely and use venture capital funding but is it worth it?

Starting up a business is really a difficult thing to do but if your heart is set on it, then you can grind and work on it to the fullest. Likewise, most starters would surely want to get more experience as they work on this career. This is just the same as mothers who are raising kids. Once they have a new-born kid, they cannot skip the child rearing part and make their kid magically grew into an adolescent. Where is the fun and lesson if they manage to skip it?

To make their company expand, entrepreneurs and businessmen will surely find ways to do it. After all, they need to achieve the goals they have set with their team. And to attain that, they really need some finance for their foundation.

For those who just started their own company, most of them would really rely on venture capital. Those capitalists will finance the business for an exchange of equity on the firm. In addition, here are also the boons and banes about it.

This can be a great advantage for those beginners. You got a new idea into your mind and want to sell it on the market. And to develop that into a product, you really need some finance. And this is how the venture capitalists help you.

Since you are lacking with that resource, you would need venture capitalists to provide you the funds. They will basically help you to expand your business since they also will gain benefit from it. It is a win-win situation for the both of you. Furthermore, you do not need to pay the funds that they offered.

On the other hand, because it stands as an equity, you will not have to repay their funds. And it just mean that they will share a slice of your ownership. As a result, you are not now the main boss of the company because they will take part on making decisions as well. It basically diminished your ownership.

In other words, you cannot fully control now the business. They will also share the ownership therefore, they can also give some ideas, changes as well as demands for the company. It does diminish your ownership and it might also be quite troublesome whenever there are conflicts with you and them. And if your product will not work, they would stop investing on it.

There might be banes and boons about this. Businessmen should really think some proper ways to be more efficient. But for beginners out there, this might probably help them.




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