Evaluate each one of them and recommend the best one

Question

1. Invest in acquiring a newly formed company worth $5million that has great technical

assets. The company has not been fortunate to generate enough revenue to run its

operations.

2. Do not invest the money and use it to keep running the company’s operations.

Answer 1

Investing in a newly formed company with great technical assets but insufficient revenue to run its operations could be a high-risk/high-reward investment. On the one hand, the technical assets could have significant potential, and if the company can successfully monetize them, the investment could yield substantial returns. On the other hand, the lack of revenue could indicate a weak business model, making the investment risky.

Option 2: Using the money to keep the company's operations running is a conservative approach that avoids the risks of investing in a new company. However, this option does not address the underlying issue of the company's lack of revenue. It may only prolong the company's struggle and ultimately lead to its failure if revenue does not improve.

Ultimately, the best option would depend on various factors, such as the investor's risk tolerance, the company's potential, and the overall market conditions. It is essential to conduct thorough due diligence and seek advice from financial professionals before making any investment decisions.