June 14, 2011
Venture Capital: Pros and Cons
“No one is doing exactly what we are, so to get first mover, venture funding is a necessity,” Jody Fennell, co-founder of Fashion-Ade.com, tells PINK.
Venture capital, a form of private funding that provides financial backing to promising startups in their early stages, is an appealing option for businesses that have trouble getting a bank loan or haven’t grown enough to start making money. But studies show only 6.8 percent of venture capital goes to companies founded by women.
Fennell’s company raised nearly $500,000, “65 percent of that from men,” through networking, having a strong business model and seeking out customers, says Fennell.
So, what are the pros and cons of venture capital?
Experts say venture capital is beneficial because it allows companies to grow faster, achieve long-term growth goals and lets you focus on the “big picture” aspect of your business.
However, others note that with venture capitalists, who are looking for a company that can compete in the market, there’s more pressure for quick success. Plus, you’re selling a portion of your company – which means you lose some control.
Bonus PINK Link: More women are attracting private equity capital for their businesses. Find out why.
By Caroline Cox
"Life is either always a tightrope or a feather
bed. Give me the tightrope." Edith Wharton