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  • Essay / Advantages and Disadvantages of Fundraising - 734

    Before you start fundraising without an upper limit, you should understand the risks below. More money means more due diligence. If you're looking to finance your business with equity, you need to understand the downsides. Adding a professional investor on board always comes at a cost in terms of owning your business. The more money you raise this way, the less ownership you have of your own business. Not only can this end up costing your business a lot of money in the long run, but it also adds a lot more administrative and operational burden to the business. Since your investors are part owners of the company, you cannot make decisions without consulting them. The more investors you have on board, the more difficult and time-consuming it will be. You'll also need to make sure you use the money you've raised appropriately. Controlling a large amount of money, with a business that hasn't been in business for too long, can be a