Which two of the following are disadvantages to Mike, Sarah and Laura of a venture capitalist investing in their business?
Select two answers - Edexcel - GCSE Business - Question 12 - 2016 - Paper 1
Question 12
Which two of the following are disadvantages to Mike, Sarah and Laura of a venture capitalist investing in their business?
Select two answers.
A The venture capi... show full transcript
Worked Solution & Example Answer:Which two of the following are disadvantages to Mike, Sarah and Laura of a venture capitalist investing in their business?
Select two answers - Edexcel - GCSE Business - Question 12 - 2016 - Paper 1
Step 1
A The venture capitalist risks losing their investment
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Answer
This option is not typically considered a disadvantage for the business owners since it primarily concerns the investor's risk, not the owners' operational or financial control. Hence, it is not selected.
Step 2
C Potential conflict between the shareholders
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Answer
This is a valid concern. Introducing a venture capitalist may lead to conflicting interests between them and the existing shareholders, affecting decision-making and governance.
Step 3
E It will reduce the control of the existing owners
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Answer
This is indeed a disadvantage, as bringing in a venture capitalist usually involves ceding some degree of control to the investors, which can lead to tensions regarding the direction of the business.
