ENTREPRENEURSHIP

Detailed explanation-1: -If the venture capitalists are unable to recoup their investment, they will be forced to write off their losses as bad debt. This will hurt their returns and could even put them out of business. In addition to the financial losses, venture capitalists may also suffer from reputational damage if a startup fails.

Detailed explanation-2: -There are two main risks when it comes to taking on venture capital: 1) The risk of not getting the investment; and 2) The risk of not being able to pay back the investment. The first risk is that your startup won’t be able to raise the money it needs from investors.

Detailed explanation-3: -VCs face the risks that the company managers won’t be able to pull off the planned exit strategy. They may not produce enough revenue to offer the company to the public and sell shares. Smaller companies looking for a big buyer may not be successful enough to make the grade, leaving VCs stuck.

Detailed explanation-4: -High stakes. One of the most significant disadvantages of venture capital is that it comes with high stakes. Venture capitalists aren’t content to invest money without control. They typically want a considerable equity stake and a seat on the company’s board of directors in exchange for their investment.