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Assess the value of venture capital as an external method of finance for Pura Cosmetics. - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2
Question 1
Assess the value of venture capital as an external method of finance for Pura Cosmetics.
Worked Solution & Example Answer:Assess the value of venture capital as an external method of finance for Pura Cosmetics. - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2
Step 1
Arguments for venture capital
Answer
Venture capital is crucial for Pura Cosmetics due to its status as a new business. Traditional banks might view it as a high-risk venture, making funding difficult. Rose Dyson, the entrepreneur, may also lack experience compared to established figures like Deborah Meadon, imparting a challenge in securing funding. The rapid expansion plans for Pura Cosmetics necessitate additional capital, which venture capital can provide effectively.
Step 2
Possible Counterarguments
Answer
One consideration is that Rose Dyson would need to relinquish some control over the business operations in exchange for the venture capital. Additionally, sharing profits with the venture capitalist could impact overall profitability and growth potential. There could also be conflicts between Dyson’s vision and the expectations of the venture capitalist regarding business direction.
Step 3
Potential Judgement
Answer
In conclusion, while venture capital could provide the necessary funding and guidance for Pura Cosmetics to navigate challenges and continue its growth trajectory, it also introduces complexities regarding control and profit-sharing. The benefits of securing this type of finance may outweigh the potential drawbacks, given the company's ambitious plans.