Title: Private equity and venture capital as a way of raising finance: case study of innocent drinks. Word count: 627
There are many ways of raising finance for the startup or expansion of a business. This paper will examine two ways of raising finance which are venture capital and private equity. They provide capital to a firm in exchange for shares in business. The differences between them are amount and time of raising finance. Innocent Drinks was chosen as a case study because innocent drinks raised finance using venture capital at first and then continued with private equity. Firstly this essay will look at the literature review on raising finance and then it will look at Innocent Drinks case study, and finally draw a conclusion about raising finance.
It has been found out that most entrepreneurs approach private equity and venture capital and are happy for improvement in their business activities, the reason for that is that private equity and venture capital investors provide company with more clients, suppliers and banks (Banerjee, Nath and Sahu, 2009). It seems like another reason of them being attractive is that it is very important source for companies, not only they are followed by high-income, but also private equity improves corporate governance structure and management level (Suli, 2009). On the other hand Masuli and Thomas (2009) claim that, there is a big risk for the investors, as they might not get return from their investment, so companies need to give good incentives to get finance. However they add that private equity strengthen shareholders role by reducing board size, improving information flows to board and increasing control over managers.
Study by Banerjee, Nath and Sahu (2009) showed that these ways of finance not only help businesses, furthermore, they increase growth and create jobs, in the view of fact that 2000 private equity and venture capital investors have invested more than €270 billion in over 56000 companies in...
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Banerjee, P., Nath, A. and Sahu, R. (2009). Trends in private equity and venture capital investments with special: focus on the booming India growth story. Journal of International Commercial Law & Technology 4 (2), pp.128-142.
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Masulis, R.W. and Thomas, R.S. (2009). Does private equity create wealth? The effects of private equity and derivatives on corporate governance. University of Chicago Law Review 76 (1), pp.219-259.
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