Wk 2 – Apply: Business Forms and Governance Top of Form Bottom of Form Assignment Content Top of Form Resources o Legal Environment of Business: Online Commerce, Business Ethics, and Global Issues :...

Business Forms and Governance
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Choosing a specific type of business entity
In the given case scenario, sole proprietor is recommended to form and establish venture capital firm.
General partners are appointed as managers of the venture capital firm, also acting as investment advisors for managing funds and capital.
High-net worth individuals and institutions are invited for investing funds.
Venture capital firm is recommended for the given scenario, which can be structured in the form of partnerships. The general partners in this entity are asked to serve as managers of the firm, and, also investment advisors for the funds or capital rose in this process. Venture capital firms invite high-net worth individuals and institutions having large amounts of available capital that might be state pension funds, insurance companies, foundations, and, other ones. The individuals and investors are called as venture capitalists that are making capital investments in these companies in return for gaining an equity stake (Baker & Powell, 2019).
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Reasons for choosing this type of business entity
Limited liability is the main reason for choosing venture capital structure.
Under this entity structure, sole proprietor is the general partner while investors are limited partners.
Sole proprietor has all management control, ownership and authority of using partnership property, and, receiving profits.
Investors investing funds in venture capital has no control and authority over venture capital.
There are several reasons for recommending this entity structure in the given case scenario. First and foremost reason is based on the fact that investors in venture capital firms are known as limited partners where there is at least one general partner and one limited partner. Sole proprietor who has invited investors can act as general partner, and, investors can act as limited partners. As a general partner, sole proprietor will assume legal position, management control, share and right to use partnership property, and, receiving profits. On the other hand, investors have no management authority and not liable to pay for the debts of the venture capital structure (Mandri-Pe
ott & Stiggers, 2013).
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Cont….
Along with capital investments, sole proprietor would also get managerial and technical expertise.
Funds invested by investors are less risky as compared to bank loans and capital markets.
Beneficial for investors also, as they get opportunity of investing funds in different start-up firms and activities.
Quite easy and convenient to spread out risks across different investments.
Investors as venture capitalist are expected to
ing managerial and technical expertise to the venture capital entity, along with capital investments. The financial capital invested by venture capitalists is considered as less risky compared to bank loans and capital markets. On the other hand, this entity structure is also beneficial for investors as they combine all their investments into one large fund for investing in several different start-up firms. The process of investing in different start-up companies also enable investors in spreading out risks to different investments. It helps in reducing risk of putting all...