Photo AI
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 presents distinct advantages for Pura Cosmetics, particularly given its status as a new business. Securing finance from traditional banks may be challenging, as they often perceive new ventures as high-risk endeavors. In this regard, venture capital could provide a suitable alternative. Moreover, Rose Dyson may benefit from the expertise and experience of Deborah Meadon, whose involvement could lend credibility and strategic guidance to the business. Additionally, considering Pura Cosmetics' goal of rapid expansion, the additional funding and resources offered by a venture capitalist might be crucial for scaling operations efficiently.
Step 2
Counterarguments to consider
Answer
While venture capital offers many benefits, it is essential to weigh the potential downsides. Firstly, Rose Dyson may need to relinquish some degree of control over business decisions, inherently shifting a portion of ownership to the venture capitalist. Furthermore, she would be obliged to share profits with the investor, which could strain cash flow. Lastly, there could be inherent conflicts arising from differing visions between Rose and her capital provider regarding the future direction of Pura Cosmetics.
Step 3
Potential judgment on venture capital
Answer
Assessing the overall value of venture capital for Pura Cosmetics suggests that despite the drawbacks, the opportunities it provides may outweigh the concerns. With the right venture capitalist, Rose Dyson stands to gain substantial insight into running a successful business, which is especially critical as she navigates the challenges of growth and market competition. Ultimately, utilizing venture capital could be a strategic move that aligns with the long-term vision of Pura Cosmetics.