Entrepreneurial Finance

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Entrepreneurial Finance

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

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