Professional Documents
Culture Documents
Lecture 20&21
Lecture 20&21
Lecture 20&21
Lecture # 20 & 21
1
Chapter 19 Financing Your Business
Financing Your
Business
2
Financing Your Business
19.1
19.1
19.1
Entrepreneurial Resources
Bootstrapping
Bootstrapping
Bootstrapping involves:
Bootstrapping
Start-Up Money
friends
family
other resources, such as savings, credit
cards, loans, and investments
banks
finance companies
investment companies
government grants
Sources of Equity
Financing
To obtain equity capital as equity capital Equity
capital is funds paid into
a source of funding for a a business
business, the owner must by investors in exchange
give equity to obtain the for common or preferred
stock. This represents
financing. the core funding of a
business, to which debt
funding may be added.
equity an ownership
in a business
Sources of Equity
Financing
Equity funding is risk capital money
sometimes called risk invested in companies
where there is financial risk
capital.
An equity fund is a
mutual fund that invests
principally in stocks. It can be
actively or passively
(index fund)managed. Equit
y funds are also known as
stock funds.
State-
sponsored Forms of
Private
venture Equity investors
capital Financing
funds
Venture
Partners
capitalists
Sources of Equity
Financing
An angel often invests angel a private,
because of his or her belief nonprofessional investor,
such as a friend, a relative,
in a business concept and or a business associate,
the founding team. who funds start-up
companies
Sources of Equity
Financing
An existing business can
use venture capital venture capital a source
of equity financing for
financing to raise large small businesses with
amounts of money to exceptional growth
achieve its goals. potential and experienced
senior management
What is Venture Capital?
Venture capital is financing that investors provide
to startup companies and small businesses that
are believed to have long-term growth potential.
Venture capital generally comes from well-off
investors, investment banks and any other
financial institutions. However, it does not always
take a monetary form; it can also be provided in
the form of technical or managerial expertise.
Sources of Equity
Financing
Venture capitalists often venture capitalists
provide managerial and individual investors or
investment firms that
technical expertise to small invest venture capital
businesses. professionally
Small Minority
Sources of
business enterprise
investment Debt
development
companies Financing programs
Commercial
SBA loans finance
companies
19.1
19.1
19.1
19.2
19.2
19.2
Types of Growth
Financing
If your company has established a successful
track record, there are other types of financing
available, including:
Private Placements
Start-Up Costs
Start-Up Costs
Operating Costs
Contingency Funds
19.2
19.2
19.2
Technology Enabled
Marketing
Technology enabled marketing (TEM) ties all of a business’s
departments, such as sales, production, and marketing,
together so they can all work from the same pool of data.
Tech Terms
online customer service
the service businesses provide to customers via the Internet