Discuss the arguments for and against James seeking finical assistance from venture capitalist in order to raise the £900,000 finance needed to open the shop in London.
Venture Capital is when capital (money) is invested in a business with a high risk. James is seeking financial assistance from venture capitalist to expand his business.
Seeking finical assistance from venture capitalist would be good as he can ask for advice from his venture capitalist. James may get some wishing to invest that has had experience with expanding businesses, so they would be able to give James the money as well as the correct and helpful information to expanding his business. The advice would help James as he may be shown where the right places are to establish his shop in London.
Another good reasons to use venture capital, is that he would not have to pay any interest on his loan. Where as with a bank loan he would have to pay a high amount of interest with his £900,000 loan. As you can see in the case study James has predicted that he will not make a profit in his new London store for 3 years, which therefore would mean a bank loan would be hard to pay off, whereas with venture capital he would avoid interest.
A bad point about using venture capital is that investors may have high expectations of his business. This would be bad for James as you can see in the case study James has predicted he will not make a profit for 3 years. If investors have to high expectations of the business they may pull out of any financial support as they business is taking to long to raise their profits.
Another bad point of using venture capital is that James may end up losing control of his business. As you can see from the case study James has already given 70% of his business to his Father and Uncle, which left James with only 30%. Asking for venture capital may leave his with a smaller percentage of his business.
In conclusion I believe James should take the venture capital....
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