The pros and cons of involving your business with a VC

Are you in charge of a new company and want to get your business up and running? Or, are you a start-up with an idea that could bridge the gap between consumer demand and supply? No matter who you are, if your company is in its initial stages and wants to hit the ground running, you require a solid capital along with some top-end financial advisory services, counselling and guidance. Individually, these services will cost you more and will create different points of contact with different agencies involved. This is where venture capital firms come in. They are a type of investment firm that funds a start-up’s venture while mentoring them throughout their different stages of growth of a company and exit after their investment has been returned.

Here are a few advantages and disadvantages you should consider before making a decision.

• 1.      You get access to their business expertise – Venture capital firms are comprised of seasoned professionals who have hands-on experience in scaling a business from the ground up. This expertise comes handy when a young business has to make key business decisions including financial management, resource management, and strategy allocation.
• 2.      You get access to additional resources – Although on paper, a VC firm provides financial advisory services, most firms will also guide you through the various stages of a business which ensures faster transitioning towards success.
• 3.      You make connections – Venture capital firms are often huge funds that have a variety of companies from different industries in their portfolio. This gives you access to market-wide young innovators and experienced professionals which may present opportunities for you to collaborate with them.
• 4.      You lose decision-making control – Although the financial advisory services and other resources a VC firm brings in is more than appreciated, the investors involved may be too aggressive owing to their years of experience. The size of their investment would have a direct impact on their decision-making power for your business.

To sum up, you should make onboard a venture capital firm depending on your risk appetite and your involvement in the processes and decision-making opportunities.