Capital Needs Planning

•Projection of required capital for running a business.
- Working Capital
- Human Capital
•Should be an ongoing part of running a business.
•Critical in:
- Start up
- During periods of growth
- During succession planning

Sources of Equity Financing

Selling Stock

•Initial Public Offering
- When a corporation sells common stock to the general public for the first time
•Advantages of selling stock
- Firm does not have to repay money received from the sale of stock.

- Firm does not have to pay dividends to stockholders unless it decides to.


Personal  Savings

•Least expensive source of funds available.
•Entrepreneur keeps ownership
•70% of Entrepreneurs utilize as primary source of financing start ups.
•Provides an estimated 35% of average initial capital requirement.
•Assuming risk is good for potential investors/lenders


Sources of Equity Financing

Friends and Family

•More willing to invest due to relationship.
•Typically small investment amounts.
•Can get start up running.
•Possibilities of ruining friendships and relationships with family.
•Be honest and treat friends and family like any outside investor.

Partners

•Partner(s) allow for additional or sharing of capital toward the business.
•Ownership is split up among partners.
•Partners share liability and risk, although can be unequal.
•Control and profits are shared
•Essential documents should be in place to outline specifics of the partnership 

Sources of Equity Financing

Angels

•Private investors who invest their own money in business startups for equity stakes.
•Usually experienced, sophisticated entrepreneurs.
•Investing knowledge, experience, and energy.
•Invest in earliest stages of the start up.
•Fill gaps between around $100,000 to $5 million.
•Bring advice, experience, and network of contracts  

Venture Capital

•Private for profit organizations.
•Pool large amounts of capital to invest in businesses.
•Look for younger companies with considerable potential for growth.
•80% invest in the expansion stage of the business.
•Seek high return rates.
•Take a large portion of control in company.


Company Stage Investment Comparison



































Остання зміна: вівторок 14 серпня 2018 08:29 AM