Acquiring Financial Resources

Technology Entrepreneurship Class

GIMPAApril 2007

Fine tuning

• Before we get into the nitty-gritty of this presentation, let’s do a bit of fine-tuning to make sure the message comes out right…

Where to Source Financial Resources

• Financial Resources (money) go wherever desirable products and services are found

• Soft money: family & friends, angel investors; hard money: banks, credit unions, venture capitalists

• Expensive money: high interest debt; “cheap” money: long term equity

Real Money Needs Real Structures

• A worthy vessel is needed for a worthy cause

• The scheduling of repayment of investments and reporting of profits may require specific management skill; this will be demonstrated through complex projections

• Corporate governance structures give investors some confidence that their money will be put to good use and that their returns will be managed and delivered

Track Record

• For the new business, the track record of the promoters is a key factor in attracting funding for the venture

• For a going concern, the existing business track record helps demonstrate potential [to investors]

• Demonstration of market insight (with figures) may help compensate where specific track record is absent

Personal Investment

• Most investors want to know how much the promoters have put into the venture

• The smaller your personal investment, the smaller the share you retain after others invest

• Structure “friendly” investments as part of your personal investment

Strong Branding

• When a financier/financial institution recognizes your brand, they’re more comfortable promoting your request

• Brand recognition gets you attention when you go out cold calling for an opportunity to make a presentation

Financial Reporting

• Income Statement: net income

• Cash Flow Projection: net cash

• Balance Sheet Projection: net worth

• 1 year, 2 years, 5 years

• Unlike what you’d imagine, you need these reports even more than your potential investors do

What Do Financial Reports Demonstrate?

• Fundamental understanding of your business

• How long it will take to break even

• What your profit margins are likely to be

• How much money you need (and when you’ll need it)

Summary

• Determine the structures required to support your business

• Have detailed financial models in your business plan that describe how your business will perform

• Strive to aggregate a significant personal investment

Q & A