Post on 21-Jan-2015
description
Entrepreneurial Finance
Anjana Vivekwww.biZkul.com
anjana@bizkul.com
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Entrepreneurial finance Entrepreneurship has many
definitions, has elements of risk-taking, innovation and pursuit of opportunities relentlessly without regard to resources controlled
One needs to understanding finance in the context of entrepreneurial firms
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Entrepreneurial finance Finance involves the study of
resource allocation, cost of capital, deciding on funding source, managing working capital needs and most importantly, managing cash
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Entrepreneurial finance Includes evaluation of business
opportunities from start-up stage to later stage companies
Needs an understanding of the value drivers of the business
Involves exploring options to create value, for the business, for stakeholders
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Entrepreneurial finance
Needs understanding of People Business Environment Deal issues Synergies
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Sources of funding Funding gap can be met from multiple
ways, traditional, new ways of funding and looking at creative options
Can you think of these and list them Each option has its own advantages and
disadvantages; can you think of what these could be?
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Sources of funding
Funding gap can be met from Equity investment
– Angel investment– Venture capital investment
Debt financing Strategic investment Increasing revenue by changing product
mix or cash flow timing Innovatively sourcing cash
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Some examples School needing funding for expansion IT product development company being
let down by investor Confectionery/chocolate producer needing
extra funds to meet expected surge in demand during the Christmas Season
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Utilisation of fundsFunds raised are invested in Available opportunity Opportunity that is latent and not obvious Creating opportunity Based on strategy of entrepreneurs, which
may change and evolve over time
The question to be asked: Is value being created or is there an attempt to create value?
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Entrepreneurial finance and financial strategy in SummaryEntrepreneurial finance includes inter-alia: Strategic financial planning for short term
and long term Preparing and implementing business plans,
financial forecasts Review of funding options Continuous monitoring and updation -
setting up internal controls, management information systems
Preparing for alliance partnerships; including due diligence review, valuation and negotiation, deal terms and conditions
Value creation www.biZkul.com