Oliver is interested in selling shares of his company to raise additional capital. He knows some investors who might be interested. While no repayment would be required for this type of financing, what would be the biggest disadvantage that Oliver should understand before choosing this option?

Question

(1 point)
Responses

He would be required to pay interest even if the business did not make money.

He would be required to pay interest even if the business did not make money.

He might lose his seed money to his investors.

He might lose his seed money to his investors.

He might need to put up some form of collateral as security.

He might need to put up some form of collateral as security.

He could give up some ownership and control of his business.

He could give up some ownership and control of his business.

Answer 1

The biggest disadvantage that Oliver should understand before choosing to sell shares of his company to raise capital is:

He could give up some ownership and control of his business.

When Oliver sells shares, he effectively dilutes his ownership stake and may also have to share decision-making authority with new investors. This can impact his control over the company's direction and operations.