An Alternative to Venture Capital Funding – Give Control to the Company

An Alternative to Venture Capital Funding – Give Control to the Company
21 Feb

If you have a business idea and you want make it a reality you are sure to need money to do that. A Venture funding may seem like a favorable option to you and you decide to go for it. Let’s assume that you are super lucky or that your idea just stands out and you get to be among the 0.5% of the people out of 300,000 ideas that a VC firm scrutinizes and they agree to fund your project but, the question you need to ask yourself is this, would you agree to give up the crucial control of your company in exchange for the capital they bring in?continue learning about venture capital at

Here when the pressing issue is about the transfer of control a Reverse Merger could prove to be a wise decision. The way Reverse merger works is pretty straight forward. When a private company is looking for ways to go public it can either go by way of a traditional Initial Public Offering (IPO) or it can go ahead and take over a public company which will save them from a lot of activities rather requiring energy, time and money. A very common way to do this is to take over a Shell Corporation or a Public shell or a Dormant Shell. A dormant Shell is an organization which is often created before the actual startup of a company and it has the existence of a public company with a legitimate financial data. All that private company needs to this is to gather some cash to pay for the accounting and legal charges and they transform into a public company themselves.

This way the holding control does not change hands and instead of answering to the investors the management reports to the shareholders of the public limited company. The company can sell its stock and raise capital/money to the public rather than putting in immeasurable efforts trying to convince a VC for funds. The biggest advantage here not to forgotten is that the control remains in the same hands and functioning.

The best part is that even the investors or the shareholders are not at risk as they can sell the stock and clear their way to the exit. Another advantage is that the company distributes the profit among its shareholders rather that a lion’s share going to a VC firm. If the company makes a profit at the end of the year it declares a dividend, if not they can chose not to.

The reverse merger model contrasts positively and investment. Though funding is interminably in rare supply, switch mergers are constantly out there for any organization that can utilize premium financial specialists. The organization can ordinarily raise cash on preferable terms from the general population over from financial speculators. By and large, the enormous point of preference of the converse merger is that the organization has all out control over its fate. The group can be guaranteed of being compensated well for achievement.

Venture Capital Funding

The organization sets the terms, can offer stock at whatever point it sees fit on whatever terms it justifies, the insiders can offer as well, and the endeavor group is not second-speculated by novices in their field, and the endeavor group does not need to fear losing value or occupations.Read more updated information straight from this link.

Anyway, a Reverse Merger has considerable amount of benefits when compared with the Venture capital funding method as an alternative to raising capital while retaining control of the company.

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