Disadvantages of selling shares of ownership

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If personal savings and bootstrapping efforts are insufficient to finance the business, entrepreneurs may turn to other sources of funds such as angel financing and venture capital. Both are forms of private equity financing. Venture capital may be an important source of funding as well as managerial advice for new ventures. To obtain it, however, entrepreneurs must sell shares of ownership in their firm.

1. What are the advantages and disadvantages of selling shares of ownership to venture capitalists?

2. What about selling shares to other investors such as family, friends, or strategic partners? What are the advantages and disadvantages of having these kinds of investors?

Reference no: EM132576708

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