Metapath Software Acquisition Decision

Methapath Software
For the exclusive use of J. MOTA
Harvard Business School
9–899–160
Rev. November 30, 1999
Metapath Software: September 1997
On September 29th, 1997, John Hansen called together his board to debate an interesting choice that
his company had to make. Hansen–the CEO of Metapath Software Corp., a Seattle–based provider
of software and services to wireless carriers–had two offers to describe to his board.
The first was an offer to be acquired by CellTech Communications, a wireless products company
who had only recently gone public. Under the terms of the deal, Metapath's shareholders would at
closing receive common stock in CellTech valued at $115 million. CellTech at that time had a
market capitalization of approximately $260 million. The ... Show more content on Helpwriting.net
...
In his discussions with analysts at major investment banks that underwrite technology IPOs,
Hansen had come away with two requirements for Metapath to be saleable as a public company.
One was that Metapath needed to attract more customers. As it stood, their revenue was all
concentrated in four accounts, and the analysts feared the their dependence on these few key
customer relationships would make them seem too risky an investment. The other requirement was
that Metapath smooth out their quarter–to–quarter revenues, which had been choppy. Hansen's plan
assumed that both of these problems would be worked out in a year.
With that in mind Hansen and his board embarked on raising enough money to see them through to
cash break–even and, ultimately, an initial public offering.
RSC's Offer
Hansen and his CFO, Paul Bialek, contacted several late–stage and mezzanine funds to solicit their
interest in a Metapath financing. Over time, two funds emerged as candidates to lead the round
–Robertson Stephens Omega Fund (RSC) and Technology Crossover Ventures (TCV). In the
subsequent discussions, RSC emerged as being quicker to provide specific term sheets and so most
of the negotiations took place with the partners at RSC. Subsequent to a term sheet being settled the
company invited TCV to join with RSC and the existing insiders to form a $11.75 million round.
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NEW FINANCE Essay
For the exclusive use of o. sow
9–810–073
REV: JULY 15, 2013
MATTHEW RHODES–KROPF
JOSH LERNER
ANN LEAMON
Iris Running Crane: December 2009
Iris Running Crane, HBS Class of 2010, shook the rain and soggy snow off her umbrella as she
entered the lobby of Soldiers Field Park on a dark December night in 2009. "Oh the weather outside
is frightful," she whistled as she took the elevator to her apartment.
Back home on the Blackfeet reservation in East Glacier, Montana, the wind would be howling down
from Canada, driving temperatures well below zero. Tonight, though, Iris had more important things
to think about than comparative climatology. Through a combination of preparation, experience,
hard work, and, she admitted, sheer ... Show more content on Helpwriting.net ...
While LBO returns had outpaced those to venture capital during the 1980s, the pattern reversed
itself in the '90s, only to change again in 2000 and in
2007.
Starting in the early 2000s, LBO firms had enjoyed ready access to low–priced debt and had
generated average returns of 15.6% between 2003 and 2006, compared to 9.9% for the Standard &
Poor's index and single digits for VC.3 Accordingly, LPs flocked to invest in LBOs, which raised
$344 billion in 2008, while VC funds raised only $63 billion.4 Records fell for largest LBO deal
(the acquisition of Texas utility TXU by Texas Pacific Group, Kohlberg Kravis Roberts, and
Goldman
Sachs for $45 billion)5 and largest fund raised (Blackstone's $21 billion Corporate Private Equity
Fund
V). In fact, the co–founder of the Carlyle Group lamented, "We should have done every single deal
everywhere in the world [in 2005 and 2006]. Every deal worked."6
VC firms, which had spent the first few years of the 2000s recovering from the telecom and
Internet bubbles, had little to crow about despite such high–profile successes as Google's 2004
initial public offering (IPO). Fundraising recovered from 2002's nadir of $12 billion, but
comparisons to the anomalous activity of 1999 and 2000 made for a sobering return to reality.
Figures for LBO activity in 2008 indicated the peak of a cycle, and the bust followed shortly

thereafter, as the global financial crisis shut off the supply of cheap debt for LBO deals. Such loans
that

Continental/Fintelco Jv Case Analysis
1. Is entry into the Argentine market a good strategic move for Continental? Entering Argentine
market in 1993–1994 was a good strategic decision for Continental as one of the TOP5 cable TV
companies in the US despite certain risks for several reasons: 1. Changes in the US regulatory
environment created additional challenges for Continental's core business: 1992 Cable Act limited
the cable TV companies' ability to raise cable rates whereas costs at market prices reached up to
$2000/subscriber. This inevitably led to constrained profit margins 2. US market began saturating:
long–standing competition on the market coupled with growing demand and consumer selectivity
has led to further squeezing margins and forced companies to seek ... Show more content on
Helpwriting.net ...
Also, after an acquisition Liberman would have 50% ownership, which could decrease his
involvement in this particular business and also led to incentives misalignment. Indeed, he had
diversified businesses and could have been looking for a cash–out. Liberman's full involvement and
commitment were crucial for joint venture success. b. Fragmented regional market in Argentine
commanded inorganic expansion trajectory for Fintelco, which in turn required capital commitment
from both parties. A ceiling should have been established to limit uncontrollable capital pump and
its inefficient allocation. c. Exchange rate risks: significant portion of revenue stream born currency
exchange risk (peso vs. USD) regardless of geographical and product diversification. These risks
were absolutely external and thus could have been hardly mitigated. 3. One could value Fintelco in
either of the following ways: a. Peso cash flows discounted at peso rate and then value converted at
the spot rate b. $US flows discounted at $US rate Which approach is more appropriate in this case?
We analyzed assumptions required to adopt each of proposed approaches. Approach (b) – $US cash
flow discounted at $US rate – assumes that: (1) Peso/$US rate would remain constant – despite
stable projection of peso exchange rate till 1998, PPP implied exchange rate has a high range
(0.999–1.436, 44%) and hence significant volatility. (2)

Background Information Of Venture Capital
1. Background Information of Venture Capital
Venture capital plays an important role in the financial industry. In this part, we will introduce the
concept, the participants, the differences with the traditional financing and the process of venture
capital.
1.1 Basic Concepts about Venture capital
The money source of venture capital is supplied by individual and/or institutional investors. Their
mission is to finance startups, rapidly growing companies or the ones that are in debt, hoping one
day they can have a sizable return upon exit. Nowadays venture capital has played a more and more
important role in the investment market because this is a good way for new companies to receive
funding capital. Not like regular source of funding, venture capital is more like to supply small and
new companies since these companies can't get funding capital from traditional way such as banks.
Venture firms provide venture capital to companies. It builds the connection from investors to
invest. In this case, venture firms seek to help companies that have the potential capacity to earn
market and money and seek for a higher percentage of reward. Once the companies come into the
market or exit, venture firms get their investment back. Venture capital firms usually prefer high–
technology industrial. However, in cases where tremendous potential growth is present, those firms
are also willing to step into traditional markets to realize their investment ideologies.
1.2 The

Explain what sources of finance are available for small to...
Explain what sources of finance are available for small to medium sized companies and explain why
they sometimes face difficulties in raising finance
1. Introduction
The SME (Small and medium enterprise) sector is one of the crucial important contributor to
economic growth in terms of Gross Domestic Product(GDP) and job creation worldwide(IFC,2010).
According to OECD(2006), SMEs had created more than sixty percent of the job opportunities for
OECD countries. That situation for developing counties are even more obvious. There is no doubt
that the development of SMEs is closely linked to national economy. The growth of SME sector,
however, presents a stalled tendency, even recession situation, owing to the deficiency of accessing
to ... Show more content on Helpwriting.net ...
It includes trade credit, public debt, bank financing as well as nonbank financial institution debt.
Unlike equity financing which would dilutes the owner's equity, and consequently, may partly
deprives the owner of control of the firm. (Abdulsaleh & Worthington, 2013). Debt financing would
be a proper approach for SMEs owners to maintain full proprietorship as well as
management(Abdulsaleh & Worthington, 2013).
2.3.1 Trade credit
According to García–Teruel & Martínez–Solano (2010), trade credit is a paying agreement which
made by seller and buyer, that allow the buyer to,in a specified period, make a deferred payment
after the good or services having been provided. In this way, small firms would have a relatively
short–time to arrange its cash flow and eventually overcoming shortage of cash or funds. Moreover,
trade credit would be a substitution when other financing techniques unavailable. That is to say,
small and medium firms will gain their opportunity of survival.
2.3.2 Non–bank financial institution debt
Non–bank financial institution's(NBFI) role of lending is similar as bank financing to a certain
extent, their biggest differences are the mode of borrowing audition and the length of the loan terms.
Generally speaking, the loans of NBFIs are longer than the duration of the commercial

How Venture Capital Works : Invention And Innovation Drive...
How Venture Capital Works
Invention and innovation drive the U.S. economy. What's more, they have a powerful grip on the
nation's collective imagination. The popular press is filled with against–all–odds success stories of
Silicon Valley entrepreneurs. In these sagas, the entrepreneur is the modern–day cowboy, roaming
new industrial frontiers much the same way that earlier Americans explored the West. At his side
stands the venture capitalist, a trail–wise sidekick ready to help the hero through all the tight spots–
in exchange, of course, for a piece of the action.
As with most myths, there's some truth to this story. Arthur Rock, Tommy Davis, Tom Perkins,
Eugene Kleiner, and other early venture capitalists are legendary for the parts they played in creating
the modern computer industry. Their investing knowledge and operating experience were as
valuable as their capital. But as the venture capital business has evolved over the past 30 years, the
image of a cowboy with his sidekick has become increasingly outdated. Today's venture capitalists
look more like bankers, and the entrepreneurs they fund look more like M.B.A.'s.
The U.S. venture–capital industry is envied throughout the world as an engine of economic growth.
Although the collective imagination romanticizes the industry, separating the popular myths from
the current realities is crucial to understanding how this important piece of the U.S. economy
operates. For entrepreneurs (and would–be entrepreneurs), such an

Startup/Seed Stage Investment by Venture Capital
STARTUP/SEED STAGE INVESTMENT BY VENTURE CAPITAL
FUNDS (IN ISRAEL): ENTREPRENEURS IN RESIDENCY AND
EXECUTIVE IN RESIDENCY PROGRAMS
ABSTRACT
What constitutes venture capital and what constitutes angel financing is a natural question. In the
time period after the bubble burst in 2000 it became easy to differentiate:
1. Angel investors: usually "high status" individuals, former successful technology entrepreneurs
who use their financial wealth, which financed birth and initial growth of ventures.
2. Venture capital (VC): independently managed, dedicated pools of capital that focus on equity–
linked investments in privately held, high growth companies needing mid stage financing.
Startup/seed financing were usually not ... Show more content on Helpwriting.net ...
The concept is to invest in an idea or new technology, create a company and as soon as it reaches a
sufficient size and credibility sell it to a corporation or to the public–equity markets. Venture
capitals' niche exists because of the structure and rules of capital markets (Zider, 1998). Banks will
only finance a new business to the extent that there are hard assets against which to secure the debt.
Most startup/seed ventures have few hard assets. Usury laws limit the interest banks can charge on
loans and the risks inherent in startup/seed ventures justify higher rates than allowed by law.
Usually, in return for financing one to five years of a company's start–up, venture capitalists expect a
ten–fold return of capital. Combined with the preferred position and stock options this is a very high
cost on capital. This equity investment is like a loan with a 60%+ annual compound interest rate that
cannot be prepaid (Zider, 1998).
Venture capital fills the void between personal sources of funds for innovation (usually provided by
friends and family of the entrepreneur, government programs or corporate venture funds) or angel
financing (former successful technology entrepreneurs that use their

Eco-Products, Inc.
CAPSTONE CASE 1: ECO–PRODUCTS, INC.
End–of–Case Assignments: Suggested Discussions and Analyses
A. Describe Eco–Products' early history (1990 through 2003). Would you view the firm during that
period as being a life–style business, an entrepreneurial venture, or? Why?
Steve Savage and his father founded the company in 1990 with the intent to provide eco–friendly
paper and janitorial supplies. They chose to locate the business in Boulder, Colorado, a community
known for its support of environmental initiatives and natural products. However, consumers were
slow to adopt eco–friendly products. Margins were low and salaries were small. Friends and family
supplied funds for business operations. This early history was ... Show more content on
Helpwriting.net ...
Note: we are using end–of–year balance sheet items (rather than averages) in order to have three
comparison years and to recognize that the firm's business model (from a retailer of products
manufactured by others to a manufacturer/wholesaler of eco–friendly products.
2005 COGS/Revenues = 2,584,326/3,649,799 = .708 = 70.8%
2006 COGS/Revenues = 3,684,492/5,751,787 = .641 = 64.1%
2007 COGS/Revenues = 7,726,455/10,867,104 = .711 = 71.1%
2005 Gross Profit Margin = 1,065,473/3,649,799 = .292 = 29.2%
2006 Gross Profit Margin = 2,067,295/5,751,787 = .359 = 35.9%%
2007 Gross Profit Margin = 3,140,649/10,867,104 = .289 = 28.9%
2005 Operating Profit Margin = 239,519/3,649,799 = .066 = 6.6%
2005 Net Profit Margin = 237,336/3,649,799 = .065 = 6.5%
2006 Net Profit Margin = 41,946/5,751,787 = .007 = 0.7%
2007 Net Profit Margin = –36,199/10,867,104 = –.003 = –0.3%
2005 Sales to Total Assets = 3,649,799/795,465 = 4.588 times
2006 Sales to Total Assets = 5,751,787/2,103,478 = 2.734 times

2007 Sales to Total Assets = 10,867,104/5,647,015 = 1.924 times
2005 Return on Assets = 237,336/795,465 = .298 = 29.8%
2006 Return on Assets = 41,946/2,103,478 = .020 = 2.0%
2007 Return on Assets = –36,199/5,647,015 = –.006 = –0.6%

Financing a Worldwide Expansion Strategy for a Limousine...
Introduction My company has become quite successful, and is now considering an expansion. In
order to facilitate this expansion, we are considering purchasing a competitor. My company is a
limousine company, and we have expanded via franchising into a number of different states and
metro areas at this point. We are considering purchasing a rival that operates mainly in areas
adjacent to ours, with the objective of expanding our presence in those markets, and building our
brand. This strategy is part of a plan to grow the business nationwide. Valuation Methods There are
several valuation methods that can be used to analyze the competing company. These are adjusted
book value, capitalized adjusted earnings, discounted future earnings, the cash flow method and the
gross revenue multiplier (Collin.edu, 2013). Another technique is to base the valuation on the stock
market valuation of a similar company. In this case, most limousine services are not publicly–traded,
so the stock market option is not available. Thus, the optimal method will come from the other five
options. The adjusted book value of the operation is based on the idea that we are paying for the
firm's book value, in particular with the book value of the assets or the book value of the equity.
This is a decent option, since we can expect to utilize our own brand, therefore the important part of
the purchase is the assets that we are acquiring, everything from cars to drivers to customer contacts.
However,

Venture Capital
Venture capital
Venture capital (also known as VC or Venture) is a type of private equity capital typically provided
to early–stage, high–potential, and growth companies in the interest of generating a return through
an eventual realization event such as an IPO or trade sale of the company. Venture capital
investments are generally made as cash in exchange for shares in the invested company.
Venture capital typically comes from institutional investors and high net worth individuals and is
pooled together by dedicated investment firms. A venture capitalist (also known as a VC) is a person
or investment firm that makes venture investments, and these venture capitalists are expected to
bring managerial and technical expertise as well as ... Show more content on Helpwriting.net ...
By far Whitney 's most famous investment was in Florida Foods Corporation. The company
developed an innovative method for delivering nutrition to American soldiers, which later came to
be known as Minute Maid orange juice and was sold to The Coca–Cola Company in 1960. J.H.
Whitney & Company continues to make investments in leveraged buyout transactions and raised
$750 million for its sixth institutional private equity fund in 2005
Early venture capital and the growth of Silicon Valley
One of the first steps toward a professionally–managed venture capital industry was the passage of
the Small Business Investment Act of 1958. The 1958 Act officially allowed the U.S. Small
Business Administration (SBA) to license private "Small Business Investment Companies" (SBICs)
to help the financing and management of the small entrepreneurial businesses in the United States.
During the 1960s and 1970s, venture capital firms focused their investment activity primarily on
starting and expanding companies. More often than not, these companies were exploiting
breakthroughs in electronic, medical or data–processing technology. As a result, venture capital
came to be almost synonymous with technology finance.
It is commonly noted that the first venture–backed startup is Fairchild Semiconductor (which
produced the first commercially practical integrated circuit), funded in 1959 by what would later
become Venrock Associates. Venrock was founded in 1969 by Laurance S.

Case Study: New Venture Financing
9–802–131 REV: AUGUST 1, 2006 HOWARD H. STEVENSON MICHAEL J. ROBERTS New
Venture Financing One of the most common issues which an entrepreneur faces revolves around
securing financing for the new venture. The questions of how and when to raise money and from
whom are frequent topics of concern. This piece will attempt to describe some common sources of
capital, and the conditions under which money is typically lent or invested. Overview As in most
transactions, the owners of capital expect to get something in return for providing financing for the
venture. In evaluating potential opportunities, the providers of funds will typically use some form of
a risk/return model. That is, they will demand a higher return when they ... Show more content on
Helpwriting.net ...
Some specialized firms provide "seed capital." Most venture capital firms require that a business
move beyond the idea stage before they will consider financing it. Yet, some businesses require a
good deal of work, and money, to get from the concept phase to the point where they can obtain
venture capital financing. These seed funds can provide this kind of capital, as can "angel" investors
(see below) and friends and family. Bootstrapping First, it is worth pointing out that many
successful ventures receive no outside funding of any kind. Entrepreneurs use their own savings,
credit cards, a second mortgage, even personally guaranteed loans, to start their businesses. The
appeal of this strategy is clear: 100% ownership of the equity. 2 New Venture Financing 802–131
Amar Bhidé conducted a study1 in the late 1980s that found that 80% of the 500 companies on Inc.
Magazine's list of the 500 fastest growing companies were started–and grown–with no outside
equity capital. Indeed, the median start–up capital required was $10,000. Certainly, one factor that
enables a bootstrap approach is the selection of a business without a particularly deep cash flow
trough. Thus, inventing a new drug or starting a semiconductor manufacturing enterprise are
businesses that would be difficult to bootstrap, simply because of the huge amounts of capital
required. The ideal business for

Kraft Heinz Case Study
Strategic Issues and Actions
Strategy Model
The strategy of Kraft Heinz dramatically changed after the merger in 2015. The new strategy is
considered to be iconoclastic. This is because the new leaders of the company are not reminiscing in
the past or using the former strategies that worked for the company. They did a complete overhaul to
the leadership and the strategies that "worked" for the company. The new company objectives are as
follows: 1. Profitable sales growth, 2 Best–in–class margins, and 3. A superior return of capital. The
company will no longer let employees slip in to the cracks and gain a retirement, it must be earned.
Since 3G Capital is the holding company for Kraft Heinz they follow the meritocracy model set
forth by 3G. Colvin (2017) discussed the fact that those who do good move forward and up, those
that do bad get fired. It is almost biblical "Don't be deceived: God is not mocked. For whatever a
man sows he will also reap" (Galatians 6:7, Holman Christian Standard Bible). Colvin explains this
when he discusses the new CEO:
Kraft Heinz CEO Ber¬nardo Hees, for example, first became a CEO in 2005 at a company called
All America Latina Logistica, owned by a 3G Capital predecessor. He was then made CEO of
Burger King, a 3G Capital holding since 2010. He moved up to be CEO of Heinz in 2013 and now
of Kraft Heinz.
The infamous company, 3G, uses a private equity strategy, however 3G Capital does not operate as a
traditional private equity corporation.

Chameleon Shoes Sources Of Capital
Chameleon Shoes Sources of Capital Every business needs some form of capital investment hence
the need for entrepreneurs to identify reliable sources of financing. The chameleon shoes venture,
being a new business opportunity will require reliable sources of capital. In fact, the chameleon
shoes business will require finances to purchase assets and for its working capital operations. As
such, this paper seeks to explore various sources of capital with particular interest on venture capital
as well as their pros and cons.
Potential Sources of Capital Personal savings is the first potential source of capital for investing in
the chameleon shoe venture. Personal savings especially money put aside in a bank is easily
accessible and is very instrumental in starting off the business venture (Castellani et al., 2013).
Actually, personal savings are important because they can be used to develop one or two pairs of
chameleon shoes which will act as samples. Using personal savings to come up with samples of the
chameleon shoes helps in pitching the product and making it possible to expand the capital outlay by
attracting potential investors. Therefore, the pros for personal savings are its ease of accessibility
and its ability to assist an entrepreneur pitch a product in the early stages. Unfortunately, personal
savings has shortcomings because it is often inadequate or the amount may be too small to make an
impact. Moreover, angel investors are a suitable

My Time At Plateau Asset Management
Lessons Learned/ Anomalies: Although many analyst internship positions are individually focused, I
found my time at Plateau Asset Management to be more team focused. Therefore, I learned many
lessons regarding team work and communication. Speaking Fast: In the initial Friday group
meetings I found myself never allowing the other analysts to digest the material that I was explain.
Musa pointed this out to me half way through the internship and told me slow down and ask
questions to make sure your listeners understand what you are explaining. This became important
when I began to mentor new inters because it was necessary that they retained the information that I
was explaining during our time together. Listening: Musa believed that I was a good listening,
however that I could improve. Musa stated, "Always listen to respond", when 'listening to respond'
you absorb what the speaker is saying before responding. Working as a Minority: The fact that I was
a minority in the team of 5 analysts did not come to my attention until the end of my internship
period. Musa and I found this strange because a vast majority of the financial industry is Caucasian
males, however even though this internship is in financial industry I was the only white Caucasian
male intern; we furthered our study and found out that I was the only white Caucasian male to even
apply for the position. We thought maybe this was because the internship was virtual. Section 3.
Observations about the

Sources of Finance
Sources of Finance
The financing of every business is the most fundamental aspect of its management. Get the
financing right and the company will have a healthy business, positive cash flows and ultimately a
profitable enterprise. The financing can happen at any stage of a business 's development. On
commencement of your enterprise the business entity will need finance to start up and, later on,
finance to expand.
Finance sources may be internal or external but they may also be short, medium or long term. *
Short Term Finance the Business for up to One year. * Medium Term Finance the business for up to
Five years. * Long Term Finance the business for more than Five years.
A. Long and Medium Term Sources of Finance 1. ... Show more content on Helpwriting.net ...
* They increase their stability and raise the credit score used by banks that value the company's risk
* It is a low–risk investment which increases the chances of a company securing bank financing for
future needs.
Disadvantages:
* If the company uses more bank loan, it will over–leverage company's assets.
5. Mortgages
It is the transfer of the property to a lender on the assumption that the borrower agrees to terms of
repayment of the debt, after which time the asset will be transferred to the borrower's ownership. A
mortgage is a common form of security for a creditor.
Advantages:
* Interest payments on your mortgage are tax deductible. * Mortgage schedules are pre–set, making
cash management more predictable.
Disadvantages:
* Mortgage requires you to pledge the purchased property to the lender. * Failure to make any
payment on time, bankruptcy, insolvency and breaches of any obligations in the mortgage
agreement will be there. 6. Leasing
It is an agreement between lesser and lessee, the lessee obtains the right to use an item and assets
owned by the lesser in exchange for periodic payments. The lessee's ownership of the assets has
expired at the end of given agreement period.
Advantages:
* It offers fixed rate financing; The Company pays at the same rate monthly. * There is less upfront
cash outlay; the company does not need to

Private Equity, Significant Part Of Alternative Investment
Private equity is significant part of alternative investment. Despite of many existing literature and
supporting research in this area private equity performance is still uncertain. The main purpose of
this work to investigate and overview available literature and recognise main issues in investment
policies of us private equity funds. To overview industry as a whole and compare results of two
main companies in US market.
To learn the concept of investment policies of private equity secondary sources will be considered
and analyzed.
Due to several challenges as cash flow uncertainty, difficulty in valuing the performance and illiquid
nature of private equity industry faces to choose appropriate strategy in investment policy and
proper ... Show more content on Helpwriting.net ...
Researchers argue that private equity succeed in the basement of transferring from portfolio
companies to private equity firms in the format of asset stripping and dividend recapitalization,
transfer from creditors in the shape of buying debt back at discount, reducing bankruptcy, and debt
exchanges.
It also examines private equity and it is role in the US market. The authors using aggregate
descriptive data, simplifying models, publish statistical analysis made a good introduction to private
equity. They took deeper look on different aspects of the private equity and effects of recent
financial crisis. Further, they consider that private equity faced the challenge of deal–making in
post–crisis period. Due to large increase of distressed portfolios and numbers of bankruptcies
together with continuing poor macroeconomic situation (slow job creation and GDP growth) it is
difficult for private equity to find a "good deal". Moreover, they cannot exit from choosing portfolio
without losses or return which less than participating work. Finally, it is hard to attract new limited
partners and grow as private equity fund. Well known private equity firm sounds better than new
established fund in order to participate from sovereign wealth fund and hedge fund.
In the US private equity market 427 firms failed to raise new funds

The Case Study of TRX Going Public
This case gives comprehensive coverage of a firm's decision to start an initial public offering but
also to go through the process of going public. TRX is a company managing travel–and–data
processing activities for its clients. Its target market has significant transaction volume in travel
agencies, travel suppliers, large corporation and credit–card issuer. Regarding its service offerings, it
focuses on transaction processing, data integration and customer care. Its fortune tied to the overall
health of travel industry. TRX generates a lot of revenue but less profit. Trip Davis, Chief Executive
Officer of TRX, Inc. decided it was time to raise capital in order to fund the growth of the company.
His main focus was to accomplish a strategic recapitalization of TRX. This case gives a brief history
about several events from the company's incorporation in 1999 through the completion of an IPO in
September 2005. The main goal is to raise capital but there is also a consideration of another reason
for going public. In November 1999, they tried to go public but the IPO was never finalized. After
the failed IPO, Trip Davis and TRX president decided to focus on strategic investors in order to raise
$20 million convertible into equity at $11 per share. In 2004, he believed that Sabre, Inc. one of the
largest strategic investors was not working for the best interest of the company. He took into
consideration three possible capital raising options: IPO, private placement of equity, or

History Of The Venture Capital Industry
1.2. History of the venture capital industry
Historically venture capital represented a small portion of alternative assets, which in turn
represented a small, but sizeable, portion of the global financial asset base. (INSERT CITATION).
Prior to the semiconductor boom in the 1960s, venture capital was closer to what today is described
as angel investing. During this period, the majority of new venture financing originated from
individual investors, and often financed by the entrepreneur or his or her family and acquaintances.
(INSERT CITATION).
Prior to the Second World War, most new venture financing was sourced from wealthy individuals
and families. (CITATION) George Doriot is often regarded as father of the modern, whereby he
established the investment firm ARD in 1947 to source institutional funds to be invested in
financing new ventures. (CITATION) A decade later the U.S. government passed the Small Business
Act of 1958, through which the government provide financing in form of debentures to Small
Business Investment Companies (SBICs). While SBICs backed some of today's most well–known
multi–national corporation such as Xerox or FedEx, and share many aspects of the modern VC firm,
they did not become the accepted model for venture financing. (Venture Capital and Finance of
Innovation, Metrick et al) Perhaps the most valuable outcome of SBICs for the establishment of the
venture capital industry was that it trained the professionals who later established the venture

venture capital Essays
CHAPTER –1
INTRODUCTION
1.1 INTRODUCTION
Venture capital, a financial innovation of the twentieth century, is a long–term liquid investment,
which can be in the form of equity, quasi–equity and sometimes debt in new and high–risk ventures.
Venture capital became better known after the famous legend of Apple Computers, which started out
in the US in 1977 with the capital firm, Arthur Rock & Co. Apple Computers then made it to the
Fortune 500 and Arthur Rock & Co. attained height in Venture capital industry. However the success
of Venture Capital in USA stimulated world countries to practice on Venture capital.
A number of technocrats are seeking to set up shop on their own and capitalize on opportunities. In
the highly ... Show more content on Helpwriting.net ...
Companies such as Digital Equipment Corporation, Apple, Federal Express, Compaq, Sun
Microsystems, Intel, Microsoft and Genentech are famous examples of companies that received
venture capital early in their development.
In India, these funds are governed by the Securities and Exchange Board of India (SEBI) guidelines.
According to this, venture capital fund means a fund established in the form of a company or trust,
which raises monies through loans, donations, issue of securities or units as the case may be, and
makes or proposes to make investments in accordance with these regulations.
1.3 OBJECTIVES
Venture Capital is one of the fastest emerging sources of finance for new entrepreneurs. In spite of
its increasing popularity, funding via Venture Capital is faced with a number of difficulties. Thus, it
is important to study the various aspects of raising funds through Venture Capital.
1. Trends in the Indian Venture Capital Industry.
2. To study the current Indian scenario.
3. To find out the different contributors to the Indian Venture Capital Industry and their investment
industry wise.
4. To identify the major players in the Indian Venture capital Industry.
5. To identify the problems faced by the Indian venture Capitalists.
6. To study the various guidelines of the regulatory body "SEBI".

1.4 SCOPE
Major limitation of the project has been the unavailability of current data, of the contributors to

Entrepreneurship Funding: A Comparative Analysis of the...
Introduction Entrepreneurship is a difficult road to travel and requires a great deal of resourcefulness
and intuitive thinking. There are great risks associated with going into business on your own, but the
payoffs can be extremely rewarding as well. What is most important on the path to entrepreneurship
is the various sources of funding available. The purpose of this essay is to discuss the various
funding sources that are available to entrepreneurs as they seek their project into materialization.
This essay will examine several areas of funding and compare and contrast the advantages and
disadvantages of each option. These options include: venture capitalists, personal bank loans, small
business administration loans and other special types of loans as well. Venture Capital One of the
first options an entrepreneur should investigate is venture capitalism or venture capitalists (VC) as a
means to fund the project of their dreams. Steier & Greenwood (1995) expressed that " Venture
capitalists represent an outside source of finance that generally takes an active interest in managing
the firm. Two common practices within the venture capital industry are co–investing and staged
financing." These two approaches dictate what routes are available for the one seeking the much
needed help in starting the business. These investors are interested in industries with high–growth
potential, such as information technology. Normally, venture capital investors provide funds to a

Case Study : Fund Accounting Manager Essay
SUMMARY:
Fund accounting manager with two decades of hands–on experience in hedge fund, venture capital
fund, private equity fund and mutual fund accounting, administration and operations. Full range of
accounting and financial experience including: investment accounting, administration, taxation,
auditing, and client service management.
HIGHLIGHT OF QUALIFICATIONS:
Outstanding experience in hedge fund, venture fund, private equity fund and mutual fund
accounting and operations with a solid knowledge of US GAAP and FASB Pronouncements.
Thorough knowledge of investment types and across diverse asset classes.
Extensive hands–on experience with daily bookkeeping, investment fair valuation, monthly,
quarterly and year–end financial preparation, tax analysis, and k–1 filing.
Ability to manage a complex area and lead the external audit process. Have worked with regulatory
agency SEC.
Ability to multitask, prioritize works, summarize issues, and develop recommendations.
Ability to provide optimal client service with excellent communication skills in both oral and
written forms.
Full working knowledge of Microsoft Office suite of applications, Advent Geneva, SS&C CAMRA
software for portfolio and partnership accounting, and Salesforce platform.
Energetic, enthusiastic, and pays a strong attention to details. PROFESSIONAL EXPERIENCE:
Vice President, Fund Accounting Manager
Conifer Fund Services, LLC (2014–Present)
Manage a team of individual contributors

Merchant Banking
A merchant bank
This free essay was written by a student and not by our expert writers. If you need custom essays on
your exact essay questions, then have a look at our essay writing service.
What is Merchant Bank?
A Merchant bank is a bank or a financial institution which is more focusing on providing financial
services and advice to corporations and wealthy individuals, so we can say that a Merchant bank is
that which providing Private equity activities of banking. There are two types of banks which
provides these private equity services and they are Merchant banks and Investment Banks and the
main difference between these banks is merchant bank invest its own capital in a client company
whereas an investment bank is act as a ... Show more content on Helpwriting.net ...
It includes Public Sector, Private Sector and Foreign Bankers. Following are some examples of
these Bankers:–
Public sector Merchant Bankers: * SBI CAPITAL MARKETS LTD * PUNJAB NATIONAL BANK
* BANK OF MAHARASHTRA * IFCI FINANCIAL SERVICES LTD * KARUR VYSYA BANK
LTD, * STATE BANK OF BIKANER AND JAIPUR
Private Sector Merchant Bankers: * ICICI SECURITIES LTD * AXIS BANK LTD.(FORMERLY
UTI BANK LTD.) * BAJAJ CAPITAL LTD * TATA CAPITAL MARKETS LTD * ICICI BANK
LTD * RELIANCE SECURITIES LIMITED * KOTAK MAHINDRA CAPITAL COMPANY LTD
* YES BANK LTD.
Foreign Players in Merchant Banking: * GOLDMAN SACHS (INDIA) SECURITIES PVT. LTD. *
MORGAN STANLEY INDIA COMPANY PVT LTD * BARCLAYS SECURITIES (INDIA) PVT.
LTD * BANK OF AMERICA, N.A * DEUTSCHE BANK * DEUTSCHE EQUITIES INDIA
PRIVATE LIMITED * BARCLAYS BANK PLC * CITIGROUP GLOBAL MARKETS INDIA
PVT. LTD. * DSP MERRILL LYNCH LTD * FEDEX SECURITIES LTD
ANALYSIS OF ARTICLES
ARTICLE 1:– Marketing effectiveness in Merchant Banking
In this article author Alka Sharma discuss about the economic reforms that took place in Indian
financial sector. This type of reforms has gaining more importance as financial intermediaries and
also help in opening new opportunity for growth and development of various financial services. As a
result of this new reforms there is a shift in financial services from quantitative to qualitative
services. Financial institution is highly

Essay on Little Sheep Case study
3i Group plc and Little Sheep*
Lily Fang
Roger Leeds
insead
School of Advanced International Studies, Johns Hopkins University
"Many people grow a company like raising a pig. The pig gets fat, you kill it and make money. I
grow my company like raising a son. The average life of a restaurant is less than three years in
China. I want Little Sheep to last a century."
– Zhang Gang, Founder, Little Sheep Catering Chain Co.
"Helping a great business to realize its potential takes a lot more than just capital. It is ultimately
about the people, thus your relationship with the management team and the sort of support you can
provide, such as introductions to key industry expertise and relevant operational best practice, is
very ... Show more content on Helpwriting.net ...
The firm opened its first Asia office in Singapore in 1997, followed by a second office in Hong
Kong four years later, and offices in Shanghai, Mumbai and Beijing subsequently. During fiscal year
2006, 16% of the group's new investments were in Asia. Alongside the geographic shift, 3i's
investment strategy has also evolved, with an emphasis on making fewer, larger, and more
sector‑focused investments. In Asia, the group's average investment size has been about $40‑50
million, and sectors in focus included consumer‑related goods and services, healthcare, and energy.
These changes in investment strategy were consistent with a decision to become more actively
involved in its portfolio companies, returning to the firm's original modus operandi as an "investor
in industry". To better serve its portfolio companies, 3i developed two unique programmes:
People Programmes and Business Development Practice.
People Programmes is a highly sophisticated approach to cultivating relationships internationally
with seasoned
* The authors express their appreciation for the research and editing support provided by Brian
DeLacey.
T
he perceived funding gap – the Macmillan gap – was scrutinized back in 1929 in a report by a
committee under the chairmanship of Lord

Macmillan. The founding of ICFC, predecessor of 3i, was closely linked to one suggestion in the
Macmillan Report.
2
3
i's growth capital and venture capital investments are

Maclean Palmer Case Study
Maclean Palmer Questions Answers
1. Evaluate Palmer and his decision to create a new venture capital fund.
Maclean Palmer and 4 partners are about to quit their jobs and move to Boston with their families to
begin crafting an offering memorandum for a private equity fund.
Private equity is an asset class consisting of equity securities in operating companies that are not
public trade on a stock exchange.
Private equity investments are primarily made by private equity firms, venture capital firms, or
angel investors, each with their own set of goals, preferences and investment strategies.
The most common investment strategies in private equity are: leverage buyout, venture capital and
mezzanine capital.
The ... Show more content on Helpwriting.net ...
In year 2000 was shaping up to be a record breaking period for venture fund raising between 1998
and 2001, over $200 billion had been raised by venture groups, more than the total of the previous
40 years.
With the management centric concept that is core strategy would be identify and recruit top level
ethic minority managers from fortune 1000 companies to run and add value to his fund's
investments.
2. Evaluate the team and Palmer's approach to selecting and putting the team together.
Palmer selected partner member according to the Investment preference, management abilities, track
record and personal styles. He tried to combine talent, networks (unknown to each other) in order to
get a diversity of skills, contacts and a business perspective to a profitable future business.
People he suggested were special and unique to their abilities, styles, abilities and networks they had
build in their work experience.
People like:
Clark T. Pierce
Andrew L. Simon
Ray S. Turner (introduced by Wanda Felton)
Dario A. Cardenas for vice president

Also GSA cofounder Clint Harris was concerned about their abilities. With a call to CEO of GM,
conclude that due diligence of Ray Turner is a key to drive this team. As well need time to calibrate
on their judgment and skill (no track record).
Palmer had an agenda prepared and strategy session in order to bond the team. Palmer was looking
forward to build the team by coming

The And On Startup Valuations
A How To on Startup Valuations
Valuations are often referred to as an art, rather than a science. An outsider to the field would
assume that there was one precise way to set the value for a growing company, but in the end it
comes to preference. Each company is different with assets that are unique and not easily compared
to others. At a baseline level, a valuation matters because it determines the share of the company
[entrepreneurs] have to give away to an investor in exchange for money (Vital 2013). With billions
of dollars on the line in a valuation, different methods are employed to determine accurate
valuations. Proposed methods can vary based on company type, stage of funding, and many other
characteristics. Bill Payne, long time angel investor, offers four popular methods as a starting point
for startup valuation. These span from the Venture Capital Method in which valuations get their
basis from potential return rates from exit events, the Berkus Method in which monetary standards
are set against the progress a startup has made in commercialization, to the Scorecard Valuation
Process in which the company is compared in a certain region and vertical range based on a set of
characteristics, finally the Risk Factor Summation Method in which characteristics are again
inspected in terms of what is expected in the future (Hudson 2015) .
While in the process of determining companies to fund, Venture Capital firms examine some of
these same characteristics on

A Brief Look at Flipkart
Flipkart – History and Background: Flipkart is a private e–commerce company in India. The
company was founded in 2007 by Sachin Bansal and Binny Bansal, both were the alumni of the
Indian Institute of Technology Delhi. The company headquarters is located in Bangalore, Karnataka.
Filpkart Online Services Pvt. Ltd was formally incorporated as a firm in October 2008. This is the
company which made online shopping famous in India. According to Alexa Traffic Ranks, filpkart is
in 10 rank in India and globally it is in 143 rank. Flipkart first started selling books in its initial
period and later it started to sale products like electronic items, air conditioner, air coolers, mobile
phones and laptops etc. It also offered stationery items, life style products and e–books. Flipkart has
launched its own product range under the name of DigiFlip offering camera bags, pen–drives,
headphones etc. A book Leaving Microsoft To Change The World is the initial product traded by
flipkart. The payment methods opted by them are cash on delivery, online payment through credit or
debit cards. Further analysis about the initial investments, sources of funding and the entrepreneurial
life cycle of Flipkart is showed in my report. Entrepreneurial Life Cycle – A Brief Overview:
Entrepreneurial life cycle is a series of stages in the survival of a business, from its scratch till
present. This life cycle helps the entrepreneur to work in a systematic way and helps him to arrange
the rite amount

Employer Analysis Paper
Memorandum
Date: January 31, 2017
To: Cindi Clayton Schnitker, Instructor
From: Jill Martin, Student JM
Subject: Employer Analysis Report
Introduction
For this assignment, I am going to conduct a thorough analysis of a prospective employer. This
includes an organization description, history, financial analysis, and industry profile. I am also going
to identify a position I plan to pursue throughout this course as well as a position summary and
benchmarks. The Employer I am going to analysis is SSC Technologies, Inc.
Position Summary
The position I plan to pursue throughout this course is a Fund Accountant Summer Internship at
SSC Technologies, Inc. located in Evansville, Indiana. For this position, SSC is looking for a
college ... Show more content on Helpwriting.net ...
SSC is a leading provider of investment and financial management software, and fund
administration services to the Hedge Fund, Private Equity, and Institutional Financial Services
Investment industry (Technologies, About Us). SSC has more the 7,500 employees working
worldwide in offices located in North America, Asia, Australia, and Europe (Technologies, SSC
History).
− History
SSC Technologies, Inc. was founded by William Stone in 1986. Stone is currently Chairman of the
Board of Directors and CEO of the company. He took the company public in 1996 which was later
acquired by entities connected to The Carlyle Group in 2005 and was taken private. In 2010 the
company began trading on NASDAQ and has a ticker symbol of SSNC. SSC has acquired 43
business, since 1995, with products, services, and technologies specific to their own industry
(Technologies, SSC

Advantages And Disadvantages Of Venture Capital
VENTURE CAPITAL
Everything begins with an idea
–Earl Nightengale
INTRODUCTION
The term 'Venture Capital' is associated with the funding of start–ups by venture capitalists, which
show potential to make it big in the future. The venture capitalists earn by getting ownership equity
in the firm. The main of form of venture capital investments begin after the initial seed funding.
Venture capital is essential for the companies who focus on novel ideas, because it is difficult to get
a loan from banks for it. INITIAL HISTORY
Georges Doriat also known as father of venture capitalism, opened up a venture capital firm,
American Research and Development Corporation (ARDC) in 1946. The main objective of ARDC
was to encourage soldiers returning from the world war. ARDC became the first equity firm to
generate capital not from the wealthy families but other sources as well. ARDC invested ... Show
more content on Helpwriting.net ...
For example, suppose you have a novel business thought however you don't have enough cash to
adequately bring it to the market yourself before contenders enter the business sector , venture
capital firms may permit you to rapidly make and grow the business, gaining market share and
brand recognition before competitors enter the market.
As an organization develops, its worth has a tendency to expand, so venture capital firms can wind
up making the original owner's stake in the organization more profitable.
From the point of view of a start up, Venture capital offers the potential for large sums of investment
and is an attractive investment. Venture capital investors regularly bolster creative new businesses
which have a degree for business expansions and can bring about higher returns when contrasted
with interest in stocks and

Eco-Products, Inc.
CAPSTONE CASE 1: ECO–PRODUCTS, INC. End–of–Case Assignments: Suggested Discussions
and Analyses A. Describe Eco–Products' early history (1990 through 2003). Would you view the
firm during that period as being a life–style business, an entrepreneurial venture, or? Why? Steve
Savage and his father founded the company in 1990 with the intent to provide eco–friendly paper
and janitorial supplies. They chose to locate the business in Boulder, Colorado, a community known
for its support of environmental initiatives and natural products. However, consumers were slow to
adopt eco–friendly products. Margins were low and salaries were small. Friends and family supplied
funds for business operations. This early history was suggestive of ... Show more content on
Helpwriting.net ...
In actual practice, accountants use the direct method for preparing the statement of cash flows which
aggregates all individual transactions made throughout the year that impact accounting cash flows.
Thus, because of the lack of detail, the indirect method for preparing the statement of cash flows is
sometimes difficult to exactly reconcile with the more detailed results provided from the direct
method. Also, as noted in the prior question, only the 2007 balance sheet was audited. Other
financial statements were only reviewed by a CPA firm. This makes it more difficult to separately
prepare (using the indirect method) a statement of cash flows for Eco–Products for 2007. While
many of the changes in balance sheet accounts between 2006 and 2007 match with the amounts
presented in the consolidated statements of cash flow in Exhibit 4, others do not. Thus, for this
question we suggest that students concentrate on Exhibit 4 to determine the extent to which Eco–
Products was building or burning cash in 2007. In Chapter 4 we presented a short method for
determining whether a firm had been building or burning cash. The short method sums the net cash
used in operating activities and the net cash used in investing activities. 2007 Cash Build/Burn = net
cash used in operating activities + net cash used in investing activities = –2,891,887 + –356,745 = –
3,248,632 Thus Eco–Products had a cash burn of over $3 million in 2007. A more detailed method

Yale Case
9–812–062 OCTOBER 18, 2011 JOSH LERNER ANN LEAMON Yale University Investments
Office: February 2011 ...anointing winners and losers on the basis of 12 months' worth of
performance is silly in the context of portfolios that are being managed with incredibly long time
horizons. – David F. Swensen, Chief Investment Officer, Yale University1 On a February afternoon
in 2011, David Swensen, Chief Investment Officer of Yale University, stared out his window at the
snow blanketing the city of New Haven. He was considering the roster for the Investments Office's
2011 softball team, which would be defending its first–ever Yale University championship. It was
nice to imagine the warmth of summer. Swensen and the Investments Office had ... Show more
content on Helpwriting.net ...
The creation of a formal endowment for Yale was triggered by the 1818 disestablishment of
Congregationalism as Connecticut's state religion. Students and alumni alike demanded that the
school respond by establishing a divinity school to offer theological instruction. To fund this effort,
numerous alumni made large gifts, the first in a series of successful fund drives. While Yale used
many of these donations to buy land and construct buildings, other funds were invested in corporate
and railroad bonds, as well as equities. By the century's end, the endowment had reached $5 million.
The growth of the endowment accelerated during the first three decades of the twentieth century,
due both to several enormous bequests and to aggressive investments in equities, which represented
well over half the endowment's portfolio during the Roaring Twenties. In 1930, equities were 42%
of the Yale endowment; the average university had only 11.5%.3 Yale avoided severe erosion of its
endowment during the Great Depression in the 1930s, however, because many recent bequests were
kept in cash or Treasuries rather than being invested in equities. In the late 1930s, Treasurer
Laurence Tighe decided that the share of equities in Yale's portfolio should be dramatically reduced.
Tighe argued that higher taxes were likely to expropriate any corporate profits that equity holders
would otherwise receive even if a recovery did occur. He concluded that bonds would

Afin310 Lecture 5 Essay
FIN310 – Venture Capital – Investing in early stage growth companies – Lecture 1
Brendon Blacker
Monday 24 March
Introduction to your guest lecturer
Brendon Blacker
Vice President
Macquarie Capital Sydney
STRICTLY CONFIDENTIAL
2
Agenda
Lecture 1 – Monday 24 March 2014
1. Introduction to Macquarie Capital
Lecture 2 – Monday 31 March 2014
– Review questions
– Quick recap
2. Introduction to venture capital
– What is venture capital? How does it work?
3. Investing in early–stage growth companies (continued)
– Who are the main players globally and in Australia?
– What do venture capitalists look for in an investment?
– And... the difference between venture capital and private equity
– How do they make investment decisions?

3. ... Show more content on Helpwriting.net ...
2.
Fund Raising

Typically takes six months to a year to obtain capital commitments

Capital can come from state and corporate pension funds, public and private endowments and
personal investors
Investment Sourcing

Can take between three and six years and is comprised of:
– Sourcing investments: identify and source opportunities
– Due diligence: extensive research and analysis is done on the company and in the market it
operates in
– Initial investment
– Often, venture capital firms preserve an appropriate percentage of their funds to participate in
follow–on fund raisings for their portfolio companies
3.
4.
Portfolio Management

The aim of this stage is to help the portfolio companies grow

Venture capital firms typically appoint representatives on the company's board and offers strategic
advice to the management team
Closing

Often funds are 10 year closed–end funds in which it is expected that all investments will be exited
and the fund wound up in
10 years


Exit of investments by way of IPO, sale to a third party (eg trade sale) or wind–up
STRICTLY CONFIDENTIAL
11
How do VC's add value?
 Network: providing a network of potential clients and partners to help build relationships
 Recruitment: assisting and identifying, interviewing and assessing talent for the business and for
the Board
 Financing: assist in raising additional equity, debt or lines of credit
 Domain knowledge: specialist knowledge of industries
and

Mix of Debt and Equity
TABLE OF CONTENT
I. ABSTRACT 1
II. INTRODUCTION 2
III. BACKGROUND 4
1. Definition of debt and equity 4 a) Definition of Debt 4 b) Definition of equity 5 2. Example of
mix structure capital 5
IV. TECHNICAL SECTION 11
1. Debt Financing – Pros Cons 11 a) Definition and Classifications of Debt Financing 11 b)
Advantages of Debt Financing 14 c) Disadvantages of Debt Financing 15 2. Equity Financing – Pros
Cons 16 a) Definition Classifications of Equity Financing 16 b) Advantages of Equity
Financing 18 c) Disadvantages of Equity Financing 19 3. The mixture of Debt and Equity 20 a)
Definition 20 b) Why do virtually all companies choose to finance themselves by the mixture of
debt and equity? 22 ... Show more content on Helpwriting.net ...
Section III, Background section, and section IV, Technical section contain the core of this report.
Background section gives you the definitions of debt and equity and how to divide them into
different types. This section also shows you some examples of mix structure capital which is the
mixture of debt and equity. Technical section discusses in detail about debt financing and equity
financing, their definitions, their sources, and how good or how bad they impact on your business.
The end of this section which focuses on mixture of debt financing and equity financing makes clear
the reasons why virtually all companies choose this structure to finance themselves with, the factors
that affect on ratio of the mixture, and a little professional understanding about optimal level of mix
structure. The last section, known as Conclusion, will summarize the key points of the report.
We do hope that you will find this report useful, and after reading it, you will have the basic
knowledge about raising business capital.
III. BACKGROUND
1. Definition of debt and equity

After going through the introduction section, we know that there is a strong relation between debt
and equity in business environment. And, virtually all companies finance themselves with a mixture
of debt and equity in order to get profits in business progress.
In this section, we are going to clarify the definition of debt and equity, as well as the types of each
one in terms

Challenges Of Entrepreneurs Face At The Very Beginning Of...
Introduction to crowdfunding: An inherent problem that entrepreneurs face at the very beginning of
their entrepreneurial initiative is to attract outside capital, given the lack of collateral and sufficient
cash flows and the presence of significant information asymmetry with investors. While different
investors exist for larger amounts of capital such as VC funds and banks, entrepreneurial initiatives
that require much smaller amounts to start with need to rely on friends and family or own savings.
They then also make extensive use of bootstrapping techniques to mitigate their financial
constraints, by boosting their short–term profits. More recently, some entrepreneurs have started to
rely on the Internet to directly seek financial help from the general public (the crowd) instead of
approaching financial investors such as business angels, banks or venture capital funds. This
technique, called crowdfunding.
Meaning of crowdfunding: Crowdfunding is one way that businesses can seek money to startup their
businesses, finance a new product, or expand their operations. Crowdfunding raises funds or capital
by using online and social media networks to get a large number of people to contribute money
towards a project in exchange for a good, service or equity. Generally money is raised through a
fundraising website such as kickstarter. Another way to describe the meaning of crowdfunding is by
the use of small amounts of capital from a large number of individuals to

The Modern Private Equity Industry
Literature Review
The modern Private equity industry is relatively young with less than approximately 50 years of
existence. The emergence of Private Equity and Venture Capital as major asset classes can be traced
through the history of a series of boom and bust cycles in the stock markets since as early as the
1940s, (John Steele Gordon, 2012,Wall Street Journal), which led to a rise in institutionalisation of
buy–out funds in early 1980's (Cao and Lerner, 2009).
Previous study on long–term stock performance of leverage buy–out backed firms primarily focused
on a rather small subset of the leverage buy–out backed firms called as Reverse Leverage Buyouts
(RLBOs). A RLBO is the Initial Public Offering of companies which were initially ... Show more
content on Helpwriting.net ...
how long does the firm stays invested post the IPO, could be an indicator of the IPO's long term
performance. Often, hasty exits from an investment, also, known as quick–flips, may result into
failure of an IPO. The level of Debt–to Equity ratio coupled with the amount of dividends paid by
the PE firm to itself are some other deciding factors of an IPO's long term performance. (Mian and
Rosenfeld, 1993) study the long–term performance of 85 reverse LBOs for a three year period
starting from one day after the firm goes public. They find that reverse LBOs show significant
positive cumulative abnormal returns and most of these returns are a result of take–over activity
which occurs mostly in the second year after the IPO. These findings were unlike that of Ritter
(1991). Other earlier studies of Degeorge and Zeckhauser (1993) and Holthausen and Larcker(1996)
also indicate that RLBOs outperform other general IPOs or the newly floated firms on the stock
market.
Additionally, long–term performance studies conducted on Venture Capital (VC) backed IPOs have
shown significant results in terms of returns. Specifically, the study conducted on 934 US VC–
backed IPOs from 1972 to 1992 by (Brav and Gompers, 1997) show that VC–backed IPOs
outperform the non–VC–backed IPOs in equal–weighted returns. They accredit this superior
performance to efficient management teams and corporate governance structures. Further research
by Krishnan et al. (2009) confirm these

Iris Running Crane Case Study
Canel Biryol IRIS RUNNING CRANE CASE STUDY Iris Running Crane, an MBA graduate
candidate, is trying to choose among three different job offers in private equity sector. Her first
option is Sunstorm Investment Group, which is one of the most respected buyout groups in the
world. Her second option is Red Horse Partners, which is a middle–market LBO group. The third is
Lepus Capital; tries to reposition itself like a turnaround expert, beginning using its own portfolio.
In this study case, I will try to analyze the advantages and disadvantages of each offers and try to
determine which offer might be the best for her personal career goals in the future. Before analyzing
job offers, I determined the expectation of Iris about her job ... Show more content on
Helpwriting.net ...
Also the firm's counter–
‐cyclical offering is another reason for Iris to be interested in this firm. Iris'
past experience in deal structuring may help her to be more successful in her career in Sunstorm.
However, despite of all the advantages the firm offers as one of the most respected buyout groups,
Sunstorm fails to expect Iris' most of the main expectations in her future position. First of all she
wants a firm culture that she can learn and be a part of change. But in Sunstorm's data driven and
hierarchical firm culture is not exactly what she wants especially while her biggest motivation to be
in PE is to make a difference. Also she believes that she won't be able to learn much when she is a
part of a very big team. The third disadvantage is, she has

Advance Fuel Corporation Case
Advanced Fuels Corporations
Financial Analysis and Forecasting
Wai Wai Yung
Wing Man Tsoi
Introduction:
Advanced Fuels Corporation (AFC) was founded five years ago by Dr. Zachary Aplin. In the fourth
year of research he and his two –member staff made a major break–through that can convert grain
waste products into ethanol which can mix with gasoline to produce a better burning automobile
fuel. Producing ethanol from waste products would lower its cost dramatically so the market
potential of the blended fuel would be increased. After AFC receiving a patent for Dr. Aplin's unique
ethanol production process he decided to broaden the scope of operations of the company but he
doesn't have additional funds to put in. So, he developed ... Show more content on Helpwriting.net
...
In AFC's business plan, it stated the company is building production facilities in five major cities in
U.S. and also the patent of unique ethanol production process can be collateral too. In AFC's
condition they need to get the operation started so a bridging loan (short–term) is most suitable for
them until they find a permanent investor to provide the additional funds needed and it carries
relatively lower risk for our bank as well.
We would prepare a few things before meeting with Dr. Aplin and his consultant. First, study the
business plan of AFC carefully to see if the proposal is feasible and reliable. Look at all the
components with the current and future economic condition, trend of the industry and related news
to see if everything is reasonable. When everything looks good from the surface, the next step is to
conduct a detail research on Dr. Aplin and his company and the industry. Dr. Aplin's personal
information such as reputation, education and achievements can tell us the ability of him to support
his new firm and to conduct the business. Studying about his company's details like financial
statements and how the operation goes can get us close to the most important part–compare the firm
with some established companies within its area of industry. From that we can estimate the risk of
the business, the return, cash flow, payback period, competitiveness

The Russian Venture Capital Market
An entrepreneur looking to fund his/her startup in Russia can do so in many different ways,
including but not limited to angel investment, venture capital investment, crowdfunding and
government funding. This essay will explain how each of the above mentioned options works and
which of the options is more beneficial for different types of startups, especially in the condition of
current adverse macroeconomic condition. It is notable that even though getting a funding through
all of this ways is possible, the one that guarantees the most stability and support is getting funding
through the government. Unfortunately, due to unstable financial situation venture capital funds are
not ready to invest in many businesses, and at the same time ... Show more content on
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Unfortunately, very few of them had survived through the default of 1998, and in 1999 the
government had passed a bill that developed a strategy for funding high–risk projects. The result of
this bill was a Venture Investment Fund that formed the structure behind the Russian start up market
and started annual venture fairs, which provided the first ever networking opportunities between the
entrepreneurs and investors in the country. The most promising sector was proven to be IT, with
such companies as Yandex (NASDAQ: YNDX), Rambler, Ozon, Mail Group (LSE: MAIL), and
others being the first recipients of these investments.
Private Equity and Venture Funds
Needless to say, that the adverse macroeconomic situation of Russia is being reflected in the venture
market. First decreases in volumes began all the way in 2013, with increased volatility on the
currency market being the major driver behind all the main key performance indicators. As noted by
Sai Agnihotram, Junior Risk Officer at a Germany–based microcredit startup, Kreditech Entering
2–3 projects is very risky and way too little for diversification. With associated risks, investors have
to come in only big. This is why, many of them are hesitant to enter the market at all. Within the
first 3 quarters of 2015, the overall number of investments decreased to 155, which is 66% of the
investments done in the same period of 2014. The

Investment Banking
Introduction to Investment Banking An investment bank is not a bank in the usual sense. It doesn't
have checking or savings accounts, nor does it make auto or home loans. It is a bank in the general
sense, in that it helps businesses, governments, and agencies to get financing from investors in a
similar way that regular banks help these organizations get financing by lending money that the
banks' customers have deposited in the banks' savings, checking, and money market accounts, and
CDs. In other words, connecting the need for money with the source of money.Investment banks act
as Intermediary between those needing funds (Corporations (domestic and foreign), government
agencies, state and local governments, foreign governments) and ... Show more content on
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After exposing the corrupt practices of commercial and investment banks, the investigation led to
the establishment of the Securities and Exchange Commission (SEC) as well as to the signing of the
Banking Act of 1933, also known as the Glass–Steagall Act. The SEC became responsible for
regulating and overseeing in–vesting in public companies. The Glass–Steagall Act mandated the
separation of commercial and investment banking and from then–until the late 1980–banks had to
choose between the two enterprises. The Securities Act of 1933 and the Securities Exchange Act of
1934 required investment banks to make full disclosures of securities offerings in investment
prospectuses and charged the SEC with reviewing them. This legislation also required companies to
regularly file financial statements in order to make known changes in their financial position. As a
result of these acts, bidding for investment banking projects became competitive as companies
began to select the lowest bidders and not rely on major traditional companies such as Morgan
Stanley and Kuhn, Loeb. By the 1950s, investment banking began to pick up as the economy
continued to prosper. This growth surpassed that of the 1920s. Consequently, major corporations
sought new financing during this period. General Motors, for example, made a stock offering of
$325 million in 1955, which was the largest stock offering to that time. In addition, airlines,
shopping malls, and governments began

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