Essay Sample on Venture Capital: Valuable Guidance, Expertise & Networking for Startups

Venture capital can be described as the mechanism where an investor supports entrepreneurial talent by providing business skills or finance for the business to obtain long-term capital gains. The advantages of venture capital for startup organizations include, firstly, valuable guidance, and expertise (Ma, 2020). Venture capital provides worthy consolation, knowledge, and leadership to entrepreneurs. Secondly, venture capital helps star up organizations build networks and connections. The networks and connections are essential for the startup to grow and become successful (Gantenbein, Kind, & Volonte, 2019). Other advantages include no obligation for repayment, and venture capitalists are trustworthy and easy to locate.

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The disadvantages of venture capital are first, dilution of control and ownership. Venture capital provides additional capital to the startup, but in return, the startup loses part of its equity. Secondly, early redemption by the venture capitalists, venture capitalists can decide to redeem their investment within a short time (Xunjie, Huchang, Xinxin, Zeshui, & Herrera, 2020). This may hurt the business as it may not be stable. Thirdly, venture capital involves a long time, and it is complicated (Gutmann, Schmeiss, & Stubner, 2019). Other disadvantages include approaching venture capitalists can become tedious; the venture capitalist my release the funds from time to time, and its mat leas to under-valuation of the startup.

When approaching a venture capital, the individual should follow the following step:

• Decide whether the venture capital is right for the startup.
• Grab the investors' attention.
• Get the right introduction
• Build momentum.
• Set expectations
• Set a deadline

The approach differs from other approaches from the classmates as it indicates and outlines the steps that the startup is supposed to take. Moreover, it helps the startup to map out areas that are of more concern. The recommendation might change in the fact that the classmates provided detailed arguments regarding their proposal. They need to identify the areas which the startup should look at before deciding to take the venture capital.

References

Gantenbein, P., Kind, A., & Volonte, C. (2019). Individualism and Venture Capital: A Cross-Country Study. Management International Review (MIR), 59(5), 741-777. https://doi-org.proxygsu-gamc.galileo.usg.edu/10.1007/s11575-019-00394-7

Gutmann, T., Schmeiss, J., & Stubner, S. (2019). Unmasking Smart Capital: How Corporate Venture Capital Units Configure Value-Adding Services. Research Technology Management, 62(4), 27-36. https://doi-org.proxygsu-gamc.galileo.usg.edu/10.1080/08956308.2019.1613117

Ma, S. (2020). The Life Cycle of Corporate Venture Capital. Review of Financial Studies, 33(1), 358-394. https://doi-org.proxygsu-gamc.galileo.usg.edu/10.1093/rfs/hhz042

Xunjie GOU, Huchang LIAO, Xinxin WANG, Zeshui XU, & Herrera, F. (2020). Consensus Based on Multiplicative Consistent Double Hierarchy Linguistic Preferences: Venture Capital in Real Estate Market. International Journal of Strategic Property Management, 24(1), 1-23. https://doi-org.proxygsu-gamc.galileo.usg.edu/10.3846/ijspm.2019.10431