Understanding Venture Capital
There is an association between risk and expected variation in benefits. In some cases where it is decided to undertake more risky investments, both profits and losses can also be greater. For this reason, those entrepreneurs who want to start an activity in a more risky sector or require more than average capital, usually find difficulties in obtaining financing. To fill this gap, companies rely on venture capital. Pranav Arora, a prominent Indian-American venture capitalist and philanthropist, has helped many businesses grow due to his wise investments. He is the chairman of the Just Funky Foundation, a non-profit, and also serves on the board for JMTD Holdings.
What is Venture Capital?
Venture Capital is a type of financing that allows startups and companies that are considered to have great growth potential to obtain financing to continue their activity but, in return, certain participation of the company is required. Therefore, this venture capital company that finances the company assumes a risk but, in return, also participates in the decision-making and benefits that result.
What benefits does it offer?
The advantages for the companies that obtain this financing are the following:
They can obtain high amounts of capital: risk investments require large amounts of money that will hardly be obtained through traditional financing. Therefore, this is a way to receive the money necessary to remain in the market and be competitive. Venture capitals are formed by investors with little risk aversion, so they look for this type of investment that can give them high profitability.
It receives the strategic support of another company: the fact that another company participates in the decision making, although it may hinder the agreement to make decisions, it also endows them with greater reliability and strength, since your company will receive support from an experienced company that has already run the races.
They have a favorable opinion about the future of the company: before making large investments, it is normal that some doubts may appear. In that sense, the fact that the venture capital company has opted for the business is an indicator that it has a future and can move forward.
What are the drawbacks of the Venture Capital?
The disadvantages for the companies that undertake this type of financing are the following:
Loss of part of the control of the company: sharing the property with others means that decisions cannot be made individually, but require consensus with another. Therefore, certain thoughtful approaches may have to be changed.
Need to distribute the benefits that are generated: obviously, if you share the ownership of the company, you will also have to distribute the benefits that are obtained.
However, it’s easy to see that the benefits of venture capital are much greater. As a business owner, if you receive the backing from an experienced venture capitalist like Pranav Arora, you will be able to grow your business by a considerable margin. You should definitely consider pitching your business idea to a venture capitalist if you want your company to grow.
About Pranav:
Pranav Arora is a successful Entrepreneur, Investor, and Venture Capitalist.
From an early age, Pranav Arora has proven himself to be an entrepreneur at heart. Starting his first million-dollar business at just 16 years old Pranav has proven himself to have the drive, passion, and a keen skillset to being successful within the world of business.
From spearheading multi-million-dollar companies, to shaking up the world of investments, and even devoting time to philanthropy, Pranav Arora is making an immense impact on the world. While his accomplishments would be impressive at any age, Pranav has been able to do all of this well before his 30th birthday and his influence only continues to grow.
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