Running head: VENTURE CAPITAL 1

Venture Capital

Name

Institutional Affiliation
VENTURE CAPITAL 2

Venture Capital

Entrepreneurs should avoid venture capital unless they lack an alternative. They cede

organizational control despite the level of ownership after accepting venture funding. An

entrepreneur will not gain back the power until the company attains a positive cash flow

(Robinson, 2017). Secondly, entrepreneurs put their payout at risk while accepting venture

capital. When venture capitalist invests in an organization, they design the investment with

preferred stock. Such a category of stock comprises various preferences for the venture investor

inclusive of liquidation preference. The preference decrees the amount of cash allocated to the

investor as payback before the common shareholder (Robinson, 2017). Lastly, accepting venture

capital puts a lot of pressure on entrepreneurs to attain the inventor's preferred returns. The

increased demand might hinder entrepreneurs from achieving their aims and aligning with

investors' needs (Robinson, 2017). Such hindrances might hinder organizational growth and

success. Therefore, entrepreneurs should avoid venture capital unless they desperately need

funding.
VENTURE CAPITAL 3

Reference

Robinson, A. (2017). 5 Ways Venture Capital Can Steal Your Dream. Retrieved from

https://www.entrepreneur.com/article/286097