Entrepreneurial Finance
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Entrepreneurial Finance Anjana Vivek www.biZkul.com [email protected] 1 www.biZkul.com
Entrepreneurial finance
Entrepreneurship has many definitions, has elements of risktaking, innovation and pursuit of opportunities relentlessly without regard to resources controlled One needs to understanding finance in the context of entrepreneurial firms 2 www.biZkul.com
Entrepreneurial finance
Finance involves the study of resource allocation, cost of capital, deciding on funding source, managing working capital needs and most importantly, managing cash
3 www.biZkul.com
Entrepreneurial finance
Includes evaluation of business opportunities from start-up stage to later stage companies Needs an understanding of the value drivers of the business Involves exploring options to create value, for the business, for stakeholders 4 www.biZkul.com
Entrepreneurial finance Needs understanding of People Business Environment Deal issues Synergies 5 www.biZkul.com
Sources of funding
Funding gap can be met from multiple ways, traditional, new ways of funding and looking at creative options Can you think of these and list them Each option has its own advantages and disadvantages; can you think of what these could be?
6 www.biZkul.com
Sources of funding Funding gap can be met from Equity investment – Angel investment – Venture capital investment
Debt financing Strategic investment Increasing revenue by changing product mix or cash flow timing Innovatively sourcing cash
7
www.biZkul.com
Some examples
School needing funding for expansion IT product development company being let down by investor Confectionery/chocolate producer needing extra funds to meet expected surge in demand during the Christmas Season
8 www.biZkul.com
Utilisation of funds Funds raised are invested in Available opportunity Opportunity that is latent and not obvious Creating opportunity Based on strategy of entrepreneurs, which may change and evolve over time The question to be asked: Is value being created or is there an attempt to create value? 9 www.biZkul.com
Entrepreneurial finance and financial strategy in Summary Entrepreneurial finance includes inter-alia: Strategic financial planning for short term and long term Preparing and implementing business plans, financial forecasts Review of funding options Continuous monitoring and updation setting up internal controls, management information systems Preparing for alliance partnerships; including due diligence review, valuation and negotiation, deal terms and conditions 10 Value creation www.biZkul.com
Entrepreneurial finance
Entrepreneurship has many definitions, has elements of risktaking, innovation and pursuit of opportunities relentlessly without regard to resources controlled One needs to understanding finance in the context of entrepreneurial firms 2 www.biZkul.com
Entrepreneurial finance
Finance involves the study of resource allocation, cost of capital, deciding on funding source, managing working capital needs and most importantly, managing cash
3 www.biZkul.com
Entrepreneurial finance
Includes evaluation of business opportunities from start-up stage to later stage companies Needs an understanding of the value drivers of the business Involves exploring options to create value, for the business, for stakeholders 4 www.biZkul.com
Entrepreneurial finance Needs understanding of People Business Environment Deal issues Synergies 5 www.biZkul.com
Sources of funding
Funding gap can be met from multiple ways, traditional, new ways of funding and looking at creative options Can you think of these and list them Each option has its own advantages and disadvantages; can you think of what these could be?
6 www.biZkul.com
Sources of funding Funding gap can be met from Equity investment – Angel investment – Venture capital investment
Debt financing Strategic investment Increasing revenue by changing product mix or cash flow timing Innovatively sourcing cash
7
www.biZkul.com
Some examples
School needing funding for expansion IT product development company being let down by investor Confectionery/chocolate producer needing extra funds to meet expected surge in demand during the Christmas Season
8 www.biZkul.com
Utilisation of funds Funds raised are invested in Available opportunity Opportunity that is latent and not obvious Creating opportunity Based on strategy of entrepreneurs, which may change and evolve over time The question to be asked: Is value being created or is there an attempt to create value? 9 www.biZkul.com
Entrepreneurial finance and financial strategy in Summary Entrepreneurial finance includes inter-alia: Strategic financial planning for short term and long term Preparing and implementing business plans, financial forecasts Review of funding options Continuous monitoring and updation setting up internal controls, management information systems Preparing for alliance partnerships; including due diligence review, valuation and negotiation, deal terms and conditions 10 Value creation www.biZkul.com
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