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Module iv


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Module iv

  1. 1. Module IV
  2. 2. Project Financing It is the long term financing of infrastructure & industrial projects based upon the projected cash flows and not on promoters balance sheet.
  4. 4. Sources of personal finance 1. 2. 3. Personal funds involves both financial resources & sweet equity Sweet equity: represents the value of the time & effort that a founder puts into a firm. Friends & family: loan or investment , involves gifts, forgone or delayed payment, or reduced or free rent Bootstrapping: finding ways to avoid the need for external financing, through thriftiness, costcutting. Obtaining grants, or any other means
  5. 5. Examples of Bootstrapping Method 1. 2. 3. 4. 5. 6. 7. Buy used instead of new equipment Coordinate purchases with other businesses Lease equipment instead of buying Obtain payments in advance from customers Minimize personal expenses Avoid unnecessary expenses, such as lavish office space or furniture Buy items cheaply (from online auctions like eBay than at full price stores)
  6. 6. Debt funding or equity financing???
  7. 7. Equity Financing Means exchanging partial . ownership in a firm, usually in the form of stock, for funding Liquidity event: which is an occurrence that converts some or all of a company’s stock into cash. Events: go public, find a buyer, merge with another
  8. 8. Sources of Equity Financing Angel investors Private placements Venture capitalist Initial public offerings
  9. 9. Angel Investor Are individuals who invest their personal capital directly in start ups
  10. 10. Private placements The sale of securities to a relatively small number of select investors as a way of raising capital. Investors involved in private placements are usually large banks, mutual funds, insurance companies and pension funds.
  11. 11. Venture Capital . Is money that is invested by venture capital firms in start-ups and small businesses with exceptional potential. Several emerging centers of innovation: Biotech Wireless IT Semiconductor Pharmaceutical.
  12. 12. Initial Public Offerings referred to simply as an "offering" or "flotation", is when a company (called the issuer) issues common stock or shares to the public for the first time. Often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately owned companies looking to become publicly traded.
  13. 13. Other Sources of Finance Seed Funding Venture Capital Mezzanine Financing Angel Investor Factoring Bank Loan Bridge Financing Crowd Funding
  14. 14. Seed Funding Investment made very early in the life if a business to fund the development of a prototype and feasibility analysis.
  15. 15. Mezzanine Financing Investment made to a firm to provide for further expansion or to bridge its financing needs before a buyout.
  16. 16. Factoring means provide finance by discounting the bills or invoices of its customers
  17. 17. Bridge Financing To maintain liquidity while waiting for an anticipated and reasonably expected inflow of cash.
  18. 18. Crowd Funding Describes the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the internet. internet
  19. 19. Types of Projects Green Field Project (33 percent) 2. Brown Field Project (25 percent) 1.