Funding in Multimedia as Business

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Funding in Multimedia as Business

  1. 1. Funding in Multimedia as Business
  2. 2. Funding in Multimedia as Business <ul><li>There are different types of funding in multimedia business </li></ul><ul><li>The types available or eligible depends on the nature, scale and needs of the business. </li></ul><ul><li>A start-up multimedia company with 3-4 people needs less fund than a game design company or themed show production house. </li></ul>
  3. 3. Funding in Multimedia as Business <ul><li>A large scale start-up company doesn’t mean they have less chance to gain financial support. </li></ul><ul><li>In business world, the reason of investing a business is – “Profit Making” </li></ul><ul><li>A good business venture, means maximum profit return, rely on good business model and marketing strategy . </li></ul><ul><li>Multimedia production company is one of the business model that attracts funds from business world. </li></ul>
  4. 4. Funding in Multimedia as Business <ul><li>There are mainly 3 types of funds for business: </li></ul><ul><li>Loan </li></ul><ul><li>Grant </li></ul><ul><li>Venture Capital </li></ul>
  5. 5. Funding in Multimedia as Business <ul><li>1. Loan </li></ul><ul><li>Commercial business loan lenders usually provide: </li></ul><ul><li>Asset based loans, purchase Asset, e.g. buy computers. </li></ul><ul><li>Credit card receipt advances, working capital credit lines. i.e., day-to-day expenses, overdraft ability. </li></ul><ul><li>Expansion, franchise, inventory, import/export financing (Import: assist you to fund payments to your suppliers until you get paid by your customers; Export: you are selling under documentary credit terms, you can apply loan which will speed up your cash collection. </li></ul>
  6. 6. Funding in Multimedia as Business <ul><li>Loan </li></ul><ul><li>The most common business loan lenders are banks </li></ul><ul><li>There are also some business loan centers / companies besides the banks. </li></ul><ul><li>Some companies provide online loan application. </li></ul>
  7. 7. Funding in Multimedia <ul><li>The success of apply loans depending on your company’s creditworthiness and the size of your loan. </li></ul><ul><li>The larger the loan amount, the lower the interest rate. </li></ul><ul><li>Interest rate varies from bank to bank, and from time to time. </li></ul>
  8. 8. Funding in Multimedia <ul><li>In most cases, if you borrow money from a regular bank, the interest rate is lower than other private financing company. </li></ul><ul><li>But banks usually require more liability from your company and sometimes your personal asset counts, too. </li></ul><ul><li>In banking field, it also depends on which bankers you know, and how well the banker know and trust you. If you have a good relationship with a particular banker, you have better chance to borrow loans. </li></ul>
  9. 9. Funding in Multimedia <ul><li>Some of the major loan sources for business in Hong Kong: </li></ul><ul><li>ACB FINANCE LIMITED 亞洲商業財務有限公司 </li></ul><ul><li>AIG FINANCE (HONG KONG) LIMITED </li></ul><ul><li>ALLIED BANKING CORPORATION (HONG KONG) LIMITED 新聯銀行 ( 香港 ) 有限公司 </li></ul><ul><li>ASIA COMMERCIAL BANK LIMITED 亞洲商業銀行有限公司 ) </li></ul><ul><li>BANK OF AMERICA (ASIA) LIMITED 美國銀行 ( 亞洲 ) 有限公司 </li></ul><ul><li>BANK OF CHINA (HONG KONG) LIMITED 中國銀行 ( 香港 ) 有限公司 </li></ul>
  10. 10. Funding in Multimedia <ul><li>2. Grants </li></ul><ul><li>Funding from Hong Kong Government for Start-up, small & medium business: </li></ul><ul><li>To start up a multimedia company in Hong Kong, you can begin from smaller scale. This can make your company eligible to gain support from the Government. </li></ul><ul><li>The Hong Kong Government and its agencies operate a number of funding support schemes to help industries develop innovative ideas and enhance their technological capability, to support the long term development of small and medium enterprises (SMEs) in Hong Kong. </li></ul>
  11. 11. Funding in Multimedia <ul><li>Applied Research Fund </li></ul><ul><li>Small Entrepreneur Research Assistance Programme </li></ul><ul><li>Teaching Company Scheme </li></ul><ul><li>Matching Grant for Joint Research </li></ul><ul><li>Industrial Research Chair Scheme </li></ul><ul><li>New Technology Training Scheme </li></ul><ul><li>Patent Application Grant </li></ul><ul><li>SME Business Installations and Equipment Loan Guarantee Scheme </li></ul><ul><li>SME Export Marketing Fund </li></ul><ul><li>SME Training Fund </li></ul><ul><li>SME Development Fund </li></ul>
  12. 12. Funding in Multimedia <ul><li>Not all the funding scheme fits into multimedia production. </li></ul><ul><li>You have to write a suitable business plan to fit into the right categories. </li></ul>
  13. 13. Funding in Multimedia <ul><li>Not all the funding scheme fits into multimedia production. </li></ul><ul><li>You have to write a suitable business plan to fit into the right categories. </li></ul>
  14. 14. Funding in Multimedia <ul><li>3. Venture Capital </li></ul><ul><li>What Is Venture Capital? </li></ul><ul><li>Venture capital (“VC”) is “risk money.” This is because venture capitalists are dependent on the founders/management to make a success of the company. </li></ul><ul><li>venture capitalists put in sizeable investments into companies, they have little control over the management of the company and face the risk of losing their entire investment in the event the company fails. </li></ul>
  15. 15. Funding in Multimedia <ul><li>3. Venture Capital </li></ul><ul><li>What Is Venture Capital? </li></ul><ul><li>However, the high risk is offset by high reward when an invested company succeeds – spectacular successes of some invested companies expect to produce an ROI (return on investment) of at least 20% to 25% per annum on the VC funds they manage. </li></ul>
  16. 16. Funding in Multimedia <ul><li>3. Venture Capital </li></ul><ul><li>What Is Venture Capital? </li></ul><ul><li>VC investments are typically equity based, meaning that the venture capitalist takes a percentage of the equity in the company that receives VC funding. </li></ul><ul><li>The venture capitalist receives his repayment in the form of – hopefully huge – capital gains when the invested company undergoes a liquidity event, for example, trade sale. </li></ul>
  17. 17. Funding in Multimedia <ul><li>3. Venture Capital </li></ul><ul><li>Due to the high risk nature of the investments, venture capitalists will carry out extensive screening from various angles such as management, technology, and business model. </li></ul><ul><li>A venture capitalist normally looks at a mid-to-long term partnership (3-5 years) with any company that receives their funding. </li></ul><ul><li>venture capitalists are not just providers of capital, but business partners who provide guidance, management assistance and networking to companies in their portfolio. </li></ul>
  18. 18. Funding in Multimedia - Principal repayment IPO, trade sale, buy back Exit Mechanism - None Management assistance, strategic alliances through contacts etc. Value Add - Loan servicing Seat on Board of Directors, monthly/quarterly operational reports Monitoring - Interest/principal repayment Dividend payout Impact on Cash Flow - Interest spread and security Potential returns on investment Criteria - Short-to-mid term Mid-to-long term Holding Period Development Interest and principal Capital gains Objective Grants Loans Venture Capital
  19. 19. Funding in Multimedia <ul><li>What Do Venture Capitalists Look For ? </li></ul><ul><li>Venture capitalists typically look at several fundamental investing principles when evaluating a company’s attractiveness as an investment. When assessing the company and its business plan, the key factors examined and some typical areas of focus are: </li></ul><ul><li>Management </li></ul><ul><ul><li>Is management committed? </li></ul></ul><ul><ul><li>What is their expertise and background? </li></ul></ul><ul><ul><li>What is the track record of the senior management team? </li></ul></ul><ul><ul><li>Have they been successful businessmen or entrepreneurs before? </li></ul></ul><ul><ul><li>Is the management team complete? </li></ul></ul>
  20. 20. Funding in Multimedia <ul><li>What Do Venture Capitalists Look For ? </li></ul><ul><li>Product/Service or Technology </li></ul><ul><ul><li>Is the product/service or technology unique? </li></ul></ul><ul><ul><li>What are the product/service breakthrough qualities? </li></ul></ul><ul><ul><li>Does the company have a sustainable competitive advantage? </li></ul></ul>
  21. 21. Funding in Multimedia <ul><li>Some companies hire high-profiled CEO and VP . Those CEOs and VPs may already established relationship with major banks, a broad network with investors, or extensive experience with related fields. </li></ul><ul><li>This can help to strengthen the company's portfolio, so that they can attract more investors, as well as gaining more credibility from banks. </li></ul>
  22. 22. Funding in Multimedia <ul><li>Business Plan </li></ul><ul><li>Why we need business plan in multimedia? </li></ul><ul><li>1. Just like other business, you need a good business plan to present your ideas , in order to attract funding. The task is to present your “great ideas”, no matter of any original purposes (personal interest, creative interest, etc), in a way that your idea has certain “market value” </li></ul>
  23. 23. Funding in Multimedia <ul><li>Business Plan </li></ul><ul><li>Why we need business plan in multimedia? </li></ul><ul><li>2. As multimedia integrates multiple specialized field, it is important to create a clear description of what your company wants to do . This can help to consolidate the company identity, and guide the future direction of your company. </li></ul><ul><li>3. A business plan can help to identify the personnel, to find out what kind of people we need to hire. </li></ul>
  24. 24. Funding in Multimedia <ul><li>Business Plan </li></ul><ul><li>Why we need business plan in multimedia? </li></ul><ul><li>2. As multimedia integrates multiple specialized field, it is important to create a clear description of what your company wants to do . This can help to consolidate the company identity, and guide the future direction of your company. </li></ul><ul><li>3. A business plan can help to identify the personnel, to find out what kind of people we need to hire. </li></ul>
  25. 25. Funding in Multimedia <ul><li>Business Plan </li></ul><ul><li>Basic Outline </li></ul><ul><li>The body of the business plan can be divided into four distinct sections: </li></ul><ul><li>1) the description of the business, </li></ul><ul><li>2) the marketing plan, </li></ul><ul><li>3) the financial management plan, </li></ul><ul><li>4) the management plan. </li></ul>
  26. 26. Funding in Multimedia <ul><li>Business Plan </li></ul><ul><li>Basic Outline </li></ul><ul><li>1. Cover sheet </li></ul><ul><li>2. Statement of purpose </li></ul><ul><ul><li>A declaration to summarize the mission of this particular plan. </li></ul></ul><ul><li>3. Table of contents </li></ul><ul><ul><li>I. The Business </li></ul></ul><ul><ul><ul><li>A. Description of business </li></ul></ul></ul><ul><ul><ul><li>B. Marketing </li></ul></ul></ul><ul><ul><ul><li>C. Competition </li></ul></ul></ul><ul><ul><ul><li>D. Operating procedures </li></ul></ul></ul><ul><ul><ul><li>E. Personnel </li></ul></ul></ul><ul><ul><ul><li>F. Business insurance </li></ul></ul></ul><ul><ul><ul><li>G. Financial data </li></ul></ul></ul>
  27. 27. Funding in Multimedia <ul><li>Business Plan </li></ul><ul><li>Basic Outline </li></ul><ul><ul><li>II. Financial Data </li></ul></ul><ul><ul><ul><li>A. Loan applications </li></ul></ul></ul><ul><ul><ul><li>B. Capital equipment and supply list </li></ul></ul></ul><ul><ul><ul><li>C. Balance sheet </li></ul></ul></ul><ul><ul><ul><li>D. Breakeven analysis </li></ul></ul></ul><ul><ul><ul><li>E. Income projections (profit & loss statements) </li></ul></ul></ul><ul><ul><ul><ul><li>Three-year summary </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Detail by month, first year </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Detail by quarters, second and third years </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Assumptions upon which projections were based </li></ul></ul></ul></ul><ul><ul><ul><li>F. Cash flow </li></ul></ul></ul>
  28. 28. Funding in Multimedia <ul><li>Business Plan </li></ul><ul><li>Basic Outline </li></ul><ul><ul><li>III. Supporting Documents </li></ul></ul><ul><ul><ul><li>Tax returns of principals for last three years, if any. </li></ul></ul></ul><ul><ul><ul><li>Personal financial statement (all banks have these forms) </li></ul></ul></ul><ul><ul><ul><li>In the case of a franchised business, a copy of franchise contract and all supporting documents provided by the franchisor </li></ul></ul></ul><ul><ul><ul><li>Copy of proposed lease or purchase agreement for building space </li></ul></ul></ul><ul><ul><ul><li>Copy of licenses and other legal documents </li></ul></ul></ul><ul><ul><ul><li>Copy of resumes of all principals </li></ul></ul></ul><ul><ul><ul><li>Copies of letters of intent from suppliers, etc. </li></ul></ul></ul>

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