Week 8 Question 1 Venture Capital Assignment Example | Topics and Well Written Essays - 250 words

Week 8 Question 1 Venture Capital - Assignment Example The company was making plans of launching new products and required a significant amount of money and venture capital was the best option for the company (Metrick & Yasuda, 2010). The venture capitalists that funded the operations of the company were mainly from the field of healthcare. Castlight Health Inc. stands to gain from the venture capital because it is yet to go public and at that time it would have expanded its operations which translate to higher profits. †¢Assess the challenges for businesses using the resources of a venture capitalist, given that significant returns on the investment are likely to be impacted by the firm. Indicate how a business can manage these expectations. Provide support for your rationale. The main disadvantage of venture capital is that it requires a very short time in generating cash. This puts a lot of financial pressure on the company and this may interfere with its daily operations. There is also the element of loss of control because the venture capitalist has made significant financial contributions in the operations of the company (Haislip, 2010). They venture capitalist may insist on appointing a representative on the management of the company. However, the business can manage the challenges by drafting an agreement to a number of restrictions as part of the deal. This includes the amount of cash to be paid and the number of people to be involved in the management team (Gladstone & Gladstone,