Advantages and Disadvantages of Venture Capital Advantages
Expertise in business. Obtaining venture capital financing can provide a start-up or fledgling business with a vital source of expertise and counsel in addition to cash backing.
Additional resources are available. A VC firm can provide active support in a number of critical areas, including legal, tax, and personnel matters, which is especially important at this stage in a young company's growth. Two potential key benefits are faster growth and greater success.
Connections are important. Venture capitalists usually have a lot of connections in the corporate world. Taking use of these connections could be extremely beneficial.
Disadvantages
Control is being lost. The disadvantages of equity financing in general can be exacerbated by venture capital funding. You may think of it as a high-powered version of equity financing.
Ownership by a minority. You may lose managerial control depending on the level of the VC firm's interest in your company, which may be greater than 50%. In essence, you could be relinquishing control of your company.
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