In order for an angel investor or venture capitalist to exchange capital for ownership in a business that is a sole proprietorship,which of these must happen?
A)The business must be re-formed as a partnership
B)The owner must give up some control
C)The owner must co-sign on all loans
D)Both A and B

Question

Quizplus · Accepted Answer

In order for an angel investor or venture capitalist to exchange capital for ownership in a business that is a sole proprietorship, either A or B or both must happen. The business must be re-formed as a partnership or the owner must give up some control. A partnership structure would provide the investor with a legal entity to invest in and potentially receive a share of the profits or losses. Giving up some control could involve the owner bringing on a co-founder or board of directors to share decision-making power. Co-signing on loans is not necessarily required for an investor to exchange capital for ownership.

In Order for an Angel Investor or Venture Capitalist to Exchange