Business Studies

You are a business consultant who works with new business owners. A new client wants to start a bakery and seeks your advice.

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.
• How does your approach differ from the recommendations of your classmates?
• How might your recommendation change after reading your classmates recommendations?

ANSWER

Startup Funding

The venture capital is a technique where investors support business skills by availing funding and business expertise in acquiring long-term capital growth by utilizing market opportunities. One of the advantages of a capital venture is valuable guidance and expertise to business people. Acquiring a venture capital financing can provide a growing business with valuable guidance and consultation, which can assist with several business decisions ranging from human resource management to financial management. Also, venture capitalists are mostly well connected, and tapping into these connections can incorporate additional advantages (Shirshikov, 2019). On the other hand, one has no control of the business because the drawbacks linked with equity financing can be compounded with venture capital financing. The mechanism can also require a high return on the initial investment.

Recommended Approach

Crowd-funding is a modern process of funding a startup business, which has gained a lot of popularity. The client should use this technique due to its vast advantages, such as generating interest and marketing the items alongside financing. The process also excludes professional investors and brokers through availing funding to the common individuals. Crowd-funding is likely to attract venture-capital investment down the line if an organization has a given successful campaign. However, the technique is a competitive avenue to earn funding; thus, the business must gain the average clients’ attention through the proper description.

Recommendation from Classmates

My classmates prefer the venture capital approach to Crowd-funding. However, my thoughts about the process differ to some extent. In as much as the capital venture has its advantages, the cons are many, and it is likely to affect the intended business. Also, the current business environment is competitive, with most aspects changing from time to time. This needs proper planning and effective logistics that make the business develop as planned.

Change of Recommendation

After going through their recommendations and planning strategies, I have considered implementing some of the borrowed ideas. Raising money through bank loans is a backup approach to getting startup capital for the business. Working capital will be important in managing a cycle of revenue-generating operations.

References

Shirshikov, D. (2019). 10 Venture Capital Advantages & Disadvantages. Retrieved from fitsmallbusiness.com/venture-capital-advantages-and-disadvantages/