Equity Financing

This allows the business to grow without a significant debt burden to slow its progress and limit its cash flow. However equity capital usually comes at a price. Venture capitalists often require that they have significant voting rights in the company and may further insist that they take over the running of the company while the original owner is relegated to a technical position. It must be remembered that profit is the motive for most venture capitalists - they are providing capital to firms that could not obtain funding from other sources, therefore they need to control their risk by ensuring that the management aspects of the business are in their control. They are effectively then controlling the internal environment of the organization so that they can better cope with the turbulent external environment faced by many of the ventures.

Was this article helpful?

0 0
Guide To Internet Entrepreneurship

Guide To Internet Entrepreneurship

Discover What It Really Takes To Succeed And Profit From Your Online Business And Find Out The Little Discussed Facts That People Ignore - Or Choose To Ignore - That Makes You Either An Internet Entrepreneur Or Simply, Plain Broke! The Ultimate Factors That Decide Your Internet Business Journey And Success Has LITTLER To Do With The Techniques You Use Or The Programs You Join Than You Expected!

Get My Free Ebook

Post a comment