Pros and cons of Venture Capital

As there are many things to have to get venture capital, as written in previous post, there are also some pros and cons with it. From the same author as previous article at Businessweek, Vivek Wadhwa has written about what an entrepreneur should know about venture capital before signing the dotted line (Venture Capital: The Good, Bad, and Ugly).

The good that comes out of venture capital money is:

1. Experience, advice, and mentoring.
2. Objectivity
3. Networking
4. Recruitment when it comes to reqruitment
5. Credibility/prestige
6. Shared risk
7. Big picture
8. Exit assistance

The downsides….:

1. Mandatory exit. A Venture Capitalist’s concern is not for your employees and customers, or to build a long-term business.
2. Loss of independence
3. They will have the right to fire you and your management team
4. Onerous conditions

The ugly side..:

1. VC conflicts. It can be a full-time job for a CEO to manage VCs.
2. Ethical conflicts
3. Unfulfilled promises
4. Egos

Recommend the article for more reading about it.

~ by Andreas Sigurdsson on August 2, 2006.

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