Joint Venture
A joint venture (JV) is a business arrangement in which two or more entrepreneurs combine their resources, expertise, and assets to achieve a specific business objective. Each party holds its separate legal status to share control and profits of the joint venture according to a mutual agreement.
What are the key features of Initial Coin Offering?
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Mutual Ownership
Each party owns a part of the entity created. The amount of resources or capital each party invests decides their ownership percentage.
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Mutual Control
Management and decision-making responsibilities are shared among the parties involved. The level of authority and control each party will have are outlined in the joint venture agreement.
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Common Objective
Joint ventures achieve a specific goal or project, such as entering a new market, developing a new product, or leveraging combined expertise. Once the objective is achieved, the JV may be dissolved or transformed into a long-term partnership.
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Unique Legal Entity
A joint venture creates a new legal entity that is distinct from the parent companies for project management. This new entity enters into contracts, own assets, and be liable for its obligations.
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Shared Profit and Risk
Profits and losses from the JV are shared among the parties based on their ownership stakes in the joint venture agreement. Such partnerships help with risk mitigation and management.
What are the benefits of ICO for startups?
There are basically two types of joint ventures:
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Equity Joint Ventures
Creates a new company in which each party holds equity shares. This type of JV requires significant capital investment and formal structure.
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Contractual Joint Ventures
This type of JV is built with contractual agreements without creating a separate legal entity. This type of JV is used for short-term projects or collaborations.