what are the advantages and disadvantages of venture capital?

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  • 1 decade ago
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    ADVANTAGES AND DISADVANTAGES OF VENTURE CAPITAL

    Venture capital provides the funding that a company needs to expand its business. It also offers a number of value added services.

    Advantages

    In addition to being a source of funding, an advantage of venture capital is that a number of value-added services are provided to companies:

    Mentoring - Venture capitalists provide companies with ongoing strategic, operational and financial advice. They will typically have nominee directors appointed to the company’s board and often become intimately involved with the strategic direction of the company.

    Alliances - Venture capitalists can introduce the company to an extensive network of strategic partners both domestically and internationally and may also identify potential acquisition targets for the business and facilitate the acquisition.

    Facilitate exit - Venture capitalists are experienced in the process of preparing a company for an initial public offering (IPO) of its shares onto the Australian Stock Exchange (ASX) or overseas stock exchange such as NASDAQ. They can also facilitate a trade sale.

    Disadvantages

    Most venture capitalists seek to realise their investment in a company in three to five years. If an entrepreneur’s business plan contemplates a longer timetable before providing liquidity, venture capital may not be appropriate. Entrepreneurs should also consider:

    Pricing - Venture capitalists are typically more sophisticated and may drive a harder bargain.

    Intrusion - Venture capitalists are more likely to want to influence the strategic direction of the company.

    Control - Venture capitalists are more likely to be interested in taking control of the company if the management is unable to drive the business.

  • Anonymous
    4 years ago

    Venture Capital Advantages And Disadvantages

  • 6 years ago

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  • 6 years ago

    Advantages: If you have less funding in the initial stages of a startup, you can always go to venture capitalists for funding.

    Disadvantages: If your idea fails, you are answerable to your angel investors for the mistakes you made.

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  • 1 decade ago

    It would help to have more information about your question. I would say advantages include gaining access to capital and people who may have experience in your field to help you improve the chances of turning your business into a success. Disadvantages include having to give up a piece of your business and having to deal with people who may tell you how to run it and don't agree with your approach.

  • 7 years ago

    ^^

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