Entrepreneurial Finance Assignment No 1

Entrepreneurial Finance
Assignment No 1
Ibrahim khan
F201314052
Define Entrepreneurial Finance:
Entrepreneurial means the persons who subscribed the new business and other words the
ownership of the business. Every entrepreneurial finance is the study of value and resources of
allocation applied to new ventures. Every Entrepreneurial in needs a lot of funds in the beginning
so that he can run his business with it.
 Entrepreneurial finance is about future planning of financial requirements for the

company operation
 The core objective of Entrepreneurial finance to provides effective decision making plane
to achieve company maximum profit
 Entrepreneurial finance strategy providing effective forecasting for company portfolio

and upcoming innovation
 Entrepreneurial finance is about raising funds understanding the effect of obligation

and capital equity.
Venture Capital:
Venture capital is raised when investors pool their money. The venture capital fund is then used
to very carefully invest in existing but usually young companies that are expected to experience
high growth. The venture capital company does not expect to invest for long and it expects to
generate a large return. For example, it might expect to invest in an opportunity for a period of
up to five years and then get out of the investment with five times the money it originally
invested. Of course, only some investment opportunities will generate the returns hoped for and
others will return far less than expected.
Venture capitalists might exert some ownership control by influencing some business decisions
in cases where they believe that by doing so they can protect their investment or cause the
investment to produce greater returns, but they generally prefer to invest in companies that are
going to be well-run and will not require them to be involved in decisions. Venture capitalists
might also provide some assistance, such as business advice, to the companies in which they in
Venture capital has become a popular source of initial funding for companies looking to raise
capital without the credit.
Angel investors :
Angel investors are wealthy individuals who on their own, or often along with other angel
investors in a network—like the Saskatchewan Capital Network—invest in new ventures in
exchange for an ownership interest in the business. Sometimes angels invest in companies in
exchange for convertible debt, an investment that starts off as a loan, usually in the form of a
bond, that they can exercise an option to convert to an equity interest in the company at a
particular point in time for a pre-determined number of shares. Angel investors are generally less
restricted in what kinds of investments they will consider as opposed to venture capitalists, who
are using other people’s pooled money. Like venture capitalists, however, they normally
undertake a rigorous due diligence process to determine whether to invest in the opportunities
they are considering.
Resources Of Financing Activity :
 Friends, family, fools  Crowd funding
 incubators  Private equity
 venture capital  Business angels
 deal sourcing and screening  Financial plain
 valuation term sheet  Corporate governance
 monitoring key metrics  Protecting knowledge
 existing IPO  Accelerators

Key differences between business angels and venture capital:
Difference in Angel and Venture Capitalist:
Venture capital Business angels
Other people’s money Own money
Higher expected IRR Lower expected IRR
Shorter investment period Longer investment period
Start-up or growth stage Incubation stage

Investments by Stages:
There are many stages to make a new venture capital business.
Seed/Startup Stage Financing:
This stage is a relatively small amount of capital provided to an inventor or entrepreneur to prove
a concept. If the initial steps are successful, this may involve product development, market
research, building a management team, and developing a business plan. This is a pre-marketing.
Early Stage Financing:
This stage provides financing to companies completing development where products are mostly
in testing or pilot production. In some cases, products may have just been made commercially
available. Companies may be in the process of organizing, or they may already be in business for
three years or less. Usually such firms will have made market studies, assembled the key
management, developed a business plan, and are ready to or have already started conducting
business. This involves the first round of financing following startup, which includes an
institutional venture capital fund. Seed and startup financing tend to involve angel investors more
than institutional investors. The networking capabilities of the venture capitalists are used more
here than in more advanced stages.
Expansion (Mid) Stage Financing:
This stage involves applying working capital to the initial expansion of a company. The
company is now producing and shipping and has growing accounts receivable and inventories. It
may or may not be showing a profit. Some of the uses of capital may include further plant
expansion, marketing, or development of an improved product. More institutional investors are
likely to be included along with initial investors from previous rounds. The VC’s role in this
stage involves a switch from a support role to a more strategic role.
Later Stage:
Capital in this stage is provided for companies that have reached a fairly stable growth rate—that
is, companies that are not growing as fast as the rates attained in the expansion stages. Again,
these companies may or may not be profitable, but are more likely to be profitable than in
previous stages of development. Other financial characteristics of these companies include
positive cash flow. This also includes companies considering IPOs.

Entrepreneurial Finance Assignment No 1

Uploaded by

Copyright:

Available Formats

Entrepreneurial Finance Assignment No 1

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Entrepreneurial Finance Assignment No 1

Uploaded by

Copyright:

Available Formats

Entrepreneurial Finance

 Entrepreneurial finance is about future planning of financial requirements for the

 Entrepreneurial finance strategy providing effective forecasting for company portfolio

 Entrepreneurial finance is about raising funds understanding the effect of obligation

Resources Of Financing Activity :

 Friends, family, fools  Crowd funding

 incubators  Private equity

 venture capital  Business angels

 deal sourcing and screening  Financial plain

 valuation term sheet  Corporate governance

 monitoring key metrics  Protecting knowledge

 existing IPO  Accelerators

Difference in Angel and Venture Capitalist:

Venture capital Business angels

Other people’s money Own money

Higher expected IRR Lower expected IRR

Shorter investment period Longer investment period

Start-up or growth stage Incubation stage

There are many stages to make a new venture capital business.

Seed/Startup Stage Financing:

Early Stage Financing:

Expansion (Mid) Stage Financing:

You might also like