Question

Respond to the following in a minimum of 175 words:

• Based on what you’ve learned from the readings, discuss the advantages and disadvantages of using venture capital as startup funding for a business.Describe what approach you would recommend for the client by using the information you researched.

Answer 1

Venture capital is one of the major private equity financing method which relates to providing with a major chunk of initial investment into a startup business.

Major advantages which are associated with arrangement of funds through venture financing is that they provide a large chunk of initial investment and they are also equipped with high knowledge and expertise about various kinds of business, so they just not only provide with the financial assistance, but they also provide with the technical assistance. They help in arranging of the additional funds of the company because they have a large network of other venture capital financers who are known to them.

There are also various disadvantages related with venture capitalist as they usually acquire a very high stake in the company and they often try to acquire the whole company in the long run. Venture capitalists are always alleged with interference in the normal business of the company and and they also try to control the business to a very large extent.

It can be said that venture capitalist are an important part of funding of startups and they are used at large scale.