Which form of business structure allows for shared capital as well as shared risks?

A joint venture is a business structure in which two or more parties collaborate to achieve a specific goal, sharing both the investments and profits as well as the risks involved. This arrangement allows each partner to contribute resources, such as capital, skills, and expertise, which can lead to reduced financial burden and broadened market reach. By pooling capital, the ventures reduce individual financial risk, making it an attractive option for businesses looking to launch new projects or enter new markets with a partner.

Shared risks in a joint venture mean that if the venture fails, the losses are distributed among the partners rather than falling solely on one entity, mitigating the potential negative impact on any single business. This collaborative structure is particularly advantageous in industries where substantial investment is required, or where the market is uncertain, helping participants to navigate challenges more effectively together.