Assess the likely impact for Zwift of having limited liability (10)

Limited liability means that the liability of the owner is limited to the amount of share capital they
have invested, and the shareholders have separate legal identities, meaning that if the business fails,
only the personal assets invested into the business is lost. One benefit of Zwift having limited liability
is that they will have to option to take risks. As Jon Mayfield and Eric Min managed to launch Zwift
with a starting investment of $3 million. For the two, this gave them a greater chance of surviving
and potentially expanding the business in the future without worrying. Therefore, Zwift grew to
more that 300,000 riders worldwide in over 150 countries due to the owners being more confident
in taking risks. They also received a venture capital of $27 million 2 years later. This was because
they had limited liability, making more venture capitalists convinced to invest as their personal
assets are secured. The more investments they collected made it even easier for them to survive in
the long-term as they could use the income to develop technology and possibly expand further.

However, having limited liability makes banks not want to provide capital for Zwift as there is a high
chance of the amount of money given will not be paid back. The banks also won’t be able to chase
up about the money as they can’t take personal assets from shareholders. Therefore, leading to
them using personal guarantees of the company’s debts, making it unable to repay and the company
could go fall into liquidation.

In conclusion, I agree that having limited liability is the better option compared to unlimited liability,
as if there is an issue or an unsatisfied customer, unlimited liability would cause Jon and Eric being
held responsible, whereas limited liability allows Zwift to run their business with several issues
against them without having to worry about being sued. Overall, limited liability allows the owners
of Zwift and itself to be safe.