What makes VC attractive to start-ups and early stage companies?

Expert Solution

Start-ups and early stage companies are usually faces shortage of fund for capital. Some investors who actually thinks that the start-ups or early stage businesses have the potential to grow will invest in them with the aim of long term growth. The amount is called as venture capital.So that venture capital also known as seed capital. Start-ups may have very innovative idea but lacks investment sources they may not be depend on bank loans. Bank loans needs to be repayed it will be huge burden from the beginning itself. So here comes venture capitalists with their money and invest it in these projects.

Venture capitalists provides encouragement to the fresh and innovative ideas by bearing risk. It also provides resources, legal assistance,expert advices ,guidance &technical assistance etc. The most important reason startups rely on venture capital is that it need not be repayed or there is no obligation to repay the amount. Venture capital helps to make connections with well established business world. vC is trustworthy.

jeff jeffy answered 1 year ago

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