Edexcel Business A Level Revision

Venture capital - Investment from an established business into another business in return for a percentage. Typically invests in early stage, high risk businesses with potential for rapid growth and/or high returns. Venture capitalists will normally look for a high rate of return in a specific time period. The business or entrepreneur may also benefit from expertise and mentoring from the venture capitalist. OFTEN ASSOCIATED WITH HIGH RISK START UPS ADVANTAGES OF VENTURE CAPITAL Potential for large sums of money for investment Expertise to help the business Makes it easier to attract other sources of finance Provides the required capital for expansion DISADVANTAGES OF VENTURE CAPITAL A long and complex process (venture capitalist hard to find) Expert financial projections are likely to be required Initially expensive for the firm e.g. legal and accounting fees Partial loss of ownership Risk of conflict or received interference Venture capitalists requires a high r...

Business angels -   Usually high-net worth individuals who invest either directly or via network syndicates into start-up businesses in return for a share of the business i.e. percentage equity. Can be seen as high risk as the business is not established but angels will assess the potential for reward. The entrepreneur will need to demonstrate a good understanding of their business model and present a detailed business plan in order to secure the investment. BUSINESS ANGELS MAY ALSO OFFER SUPPORT AND EXPERTISE , ADVANTAGES OF BUSINESS ANGELS They are normally very knowledgeable and experienced in business matters; may act as a mentor for the business, providing advice and guidance. DISADVANTAGES OF BUSINESS ANGELS May require some form of equity (share) which gives them a measure of control. BEST FOR .... newer and possibly high risk, early stage or high growth business.