Chapter 10 Financing entrepreneurial ventures worldwide. The topics discussed in this chapter are: discuss the history & current status of venture investing in the , explain the professional venture investing cycle and its relevance to entrepreneurs seeking professional venture capital, describe the venture capital screening process & list characteristics central to determining a venture capitalist’s willingness to invest,. | Entrepreneurship Canadian Edition William D. Bygrave, Andrew Zacharakis, Sean Wise 1 FINANCIAL ENTREPRENEURIAL VENTURES WORLDWIDE Chapter 10 2 3 Learning Objectives Entrepreneurial Financing for the World’s Poorest Learning Objective Describe the financing available for entrepreneurs in underdeveloped countries. Entrepreneurs and Informal Investors Learning Objective Describe the relationship between entrepreneurs and informal investors. Venture Capital Learning Objective Explain what venture capital is and how it is used by entrepreneurs. Factors Affecting Availability of Financing Learning Objective Identify the factors affecting the availability of financing. 3 Today’s Key Concepts Entrepreneurs and Informal Investors Stages of Finance Calculating Valuation Microfinance Crowdfunding Accelerators vs. Incubators 4Fs Angel vs Venture Capitalists 4 Falling cost of tech entrepreneurs launching products Users Infrastructure COGs COCA Why is it cheaper than ever to launch a digital startup? 5 Startup Financing Cycle 6 Stages of Finance 7 Match Stage to Source 8 Valuation? PostMV = PreMV + Cash Invested Investor Equity = Cash Invested / PostMV Founder Equity = PreMV / PostMV But how do you set PreMV? Value is in the eye of the buyer (not seller) Always ask: We need $X, to hire Y and do Z, which will result in an increase of A and a doubling of B over the next 1X months 9 Valuation in Action John offers the Dragons 10% of his Startup but wants $250,000. How much is it worth (according to John) before an investment? Dragon 1 wants to invest $100,000 into John’s Startup, but she wants 20%. If the founders agree, what will their PostMV be? Dragon 2 offers John $250,000 on a $2 million PostMV. Is that a better deal? 10 Informal Investors: 4Fs Four Fs: founders, family, friends, and foolhardy investors. 11 Angel Investors An angel Investor (a type of informal investor) is an experienced and well-educated professional who invests their own funds in | Entrepreneurship Canadian Edition William D. Bygrave, Andrew Zacharakis, Sean Wise 1 FINANCIAL ENTREPRENEURIAL VENTURES WORLDWIDE Chapter 10 2 3 Learning Objectives Entrepreneurial Financing for the World’s Poorest Learning Objective Describe the financing available for entrepreneurs in underdeveloped countries. Entrepreneurs and Informal Investors Learning Objective Describe the relationship between entrepreneurs and informal investors. Venture Capital Learning Objective Explain what venture capital is and how it is used by entrepreneurs. Factors Affecting Availability of Financing Learning Objective Identify the factors affecting the availability of financing. 3 Today’s Key Concepts Entrepreneurs and Informal Investors Stages of Finance Calculating Valuation Microfinance Crowdfunding Accelerators vs. Incubators 4Fs Angel vs Venture Capitalists 4 Falling cost of tech entrepreneurs launching products Users Infrastructure COGs COCA Why is it cheaper than .
