">
TechMoran
  • About Us
  • Deals
  • Jobs
  • Motoring
    • Money
  • Pitch Your Startup
  • Submit Your Post
  • Freelance Gigs
  • Travel
  • Men’s Corner
  • Dating
Wednesday, January 27, 2021
  • Startups
  • Reviews
  • Insider
    • Obituaries
  • Business
  • Women
  • Blockchain
  • Columnists
  • Hacks & Facts
    • How To
  • Editions
    • US Edition
    • India Edition
    • MENA Edition
    • Asia Edition
    • Europe Edition
    • International Edition
No Result
View All Result
TechMoran
">
Home Columnists

In the Know: Weighing the Pros and Cons of Venture Capital for Startups

Karani Nyamu by Karani Nyamu
1 year ago
in Columnists, Startups
11 min read
0

Some startups looking for financing usually depend on venture capital firms. These firms are capable of providing capital, strategic assistance,  introductions to potential partners, employees, consumers, and a lot more.

Their purpose is to combine investment funds from different sources and invest in companies that are likely to give the investors an excellent return on their investment. Since firms need higher return rates than other investments, they usually invest in a promising startup or growing businesses that have great potential for growth but also worth the risk.

Financing through venture capital is not simple to obtain or close; thus, entrepreneurs must prepare themselves to get venture capital backing if they are aware of the process, the expected deal terms, as well as the potential problems that will occur.

Advantages

Investors are ready to take the opportunity as they believe in the long-term success of the business. As such, financing through venture capital is ideal for startups the need high capital.

Advice and Help Is Available

Several successful startup founders become associates with venture capital firms after exiting their businesses. Usually, they have experience in scaling a business, solving daily concerns, and tracking financial performance.

Even if they do not have a background in startups, they are typically experienced at helping startup businesses, and this outcome makes them important leadership resources to the companies in which they invest.

Partnership Opportunities with Experts

As you acquire venture capital funding, you also get what they refer to as smart money, which means the funds you receive comes with the extra advantage of the expertise the firm can offer.

READ  Tugende raises $5m to expand employment opportunities & financial inclusion in Uganda

Related posts

Kenya’s Insuretech startup Pula raises $6m to scale up operations in 13 markets across Africa

January 26, 2021
0

Finnfund & Norfund double Starsight’s funding to $20 million for Ghana expansion

January 23, 2021
0

African tech startup funding passes $700m in 2020 despite COVID-19

January 23, 2021
0

Which Tech Companies Are Employee Owned and Why?

January 22, 2021
0

That said, you will often operate with firm partners, startup founders who received funding, as well as specialists from both networks to lead your company on the best path to success and growth.

Increased Publicity and Exposure

Nearly all venture capital firms have groups for personal relations and media contacts like visit facts.net, and it’s in their best interest to promote your startup.

As a result, increased publicity can lead to more potential customers, partners, staff, and other firms that are willing to raise funding.

No Need for Monthly Payments

Unlike personal loans and small business, there are no fixed payments for your company to make.

This advantage helps in freeing up capital for your company, which allows you to reinvest by hiring a bigger team, improving products, or further expanding services rather than making interest payments.

Disadvantages

Since the primary focus of the firms is to receive capital gains, venture capital is not ideal for a business person whose business plan needs more time to produce liquidity.

Expensive Financing Cost

Giving up equity in business might seem reasonable compared to loans. On the other hand, you will only realize the cost of equity once you sold the business.

READ  Plentywaka raises $300,000 for expansion, launches in Abuja

Although venture capital gives much more than money, like introductions and advice, the decisions must not be made easily, particularly if there are other alternatives for funding.

Reduced Founder Ownership

When raising a fund, you must dilute your equity to distribute shares to the investors. Several businesses outgrow their first funding and need to raise more rounds from firms.

This effect often results in founders losing most of the ownership in their business; hence, losing their powers in decision making.

Expectations of Rapid Business Growth

Venture capital firms will need your business to increase in value to acquire a return on their funding. Knowing the company must become successful usually increases the pressure that establishment experience.

By talking with other founders and investors, establishment can guarantee that they are working on their goals and can learn from the help of others. Also, they should be mindful of reducing their workload through delegation when appropriate because they must be able to spend their energy and time on vital business components.

To Conclude

To establish and develop a thriving business, you will need meticulous planning, effective strategies, and adequate capital.

Designing and strategizing can be done in-house, but entrepreneurs with excellent ideas usually need to look for external sources for financing, and here is where venture capital firms come into the picture. Still, the financial resources provided by investors or firms have both pros and cons that both parties must consider and weigh.

Readers 3,881

Share

  • Click to share on Telegram (Opens in new window)
  • More
  • Click to share on Tumblr (Opens in new window)
  • Click to print (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Pinterest (Opens in new window)
  • Click to share on Reddit (Opens in new window)
  • Click to share on Pocket (Opens in new window)

Like this:

Like Loading...

Related

Karani Nyamu

Karani Nyamu

Group CEO Verve, one of the leading Software and Systems integrators in East Africa.

Related Posts

Startups

Kenya’s Insuretech startup Pula raises $6m to scale up operations in 13 markets across Africa

January 26, 2021
0
Startups

Finnfund & Norfund double Starsight’s funding to $20 million for Ghana expansion

January 23, 2021
0
Startups

African tech startup funding passes $700m in 2020 despite COVID-19

January 23, 2021
0
Columnists

Which Tech Companies Are Employee Owned and Why?

January 22, 2021
0
Startups

Free money transfer service Taptap Send launches its services to Kenya

January 22, 2021
0
Health

54gene launches a genome sequencing lab to track infectious and non-communicable diseases prevalent in Nigeria

January 22, 2021
0
Startups

Uganda’s Innovex raises funding from Gaia Impact Fund to enable remote monitoring for solar companies

January 22, 2021
0
Startups

Aerobotics Raises $17 Million Led by Naspers To Scale AI for Agriculture Globally

January 21, 2021
0

https://bit.ly/2VOxuoBhttps://bit.ly/2VOxuoBhttps://bit.ly/2VOxuoB
ADVERTISEMENT

Join our Mailing List

Loading

Recent Posts

Samsung, Safaricom partner to push Samsung Galaxy S21 pre-orders

January 26, 2021

Safaricom’s M-PESA Bill Manager brings digital receitps, bills and invoices to businesses & landlords

January 26, 2021

8 Facts People Don’t Know About Bitcoin

January 26, 2021

Stranded in Lockdown? Here Are 3 Ways You Can Make Money Via Cryptocurrencies Online

January 26, 2021

3 Tips On Avoiding Cryptocurrency Scams

January 26, 2021
">
">

Follow Us

">

There are many sites out there focused on blowing off some steam, from funny entertainment to thrilling experiences like playing online, in some cases online gaming could grant you the chance to win extra money. We came across rocketpot.io while browsing for a good btc casino online and it left us a very good impression with their wide variety of games and crypto offering.

Privacy & Cookies: This site uses cookies. By continuing to use this website, you agree to their use.
To find out more, including how to control cookies, see here: Cookie Policy

© 2019 Moran Media Group - All rights reserved TechMoran.

No Result
View All Result
  • Startups
  • Reviews
  • Insider
    • Obituaries
  • Business
  • Women
  • Blockchain
  • Columnists
  • Hacks & Facts
    • How To
  • Editions
    • US Edition
    • India Edition
    • MENA Edition
    • Asia Edition
    • Europe Edition
    • International Edition

© 2019 Moran Media Group - All rights reserved TechMoran.

Login to your account below

Forgotten Password? Sign Up

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
%d bloggers like this: