9.1c Ventures Flashcards Preview

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Flashcards in 9.1c Ventures Deck (9)
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1
Q

Corporate venturing definition

A

An agreement between two companies that will see an established company invest in a new company that it believes will have high growth potential

2
Q

Venture capitalists/business angels definition

A

An individual or small group that invests in companies

3
Q

What is an alternative source of finance for ventures?

A

Merchant banks

4
Q

Examples of corporate venturing

A
  • Unilever Ventures

- Google Ventures

5
Q

What happens in corporate venturing?

A

The bigger business will buy shares in the business (an equity stake) and become very active in the decision making process

6
Q

Why do bigger companies invest in smaller companies?

A
  • To benefit financially from their future success
  • Part of a strategy to move into a new industry or market
  • To gain access to their intellectual property
7
Q

Why do smaller companies welcome investments?

A

They can grow by gaining access to:

  • Additional funding
  • Expertise
  • Operation processes
8
Q

Advantages of venture capital:

A
  • Venturists can have option of not taking dividends they are entitled to in order to keep more money in the business
  • Comes with knowledge and contacts
  • Used by high-risk start-ups who would struggle to get funding elsewhere
9
Q

Disadvantages of venture capital:

A
  • Smaller business has to give up some ownership

- The larger business might have too much influence on the smaller business

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