Ch 13 Flashcards
What is..
Modest money paid to entrepreneurs to prove a concept
Seed-stage financing
What is
money to enable them to implement their idea
startup financing
what is
larger amounts of funds for companies with a product or service piloted
early stage financing
note:
there are what of financing stages
multiple second stages
3 F’s
Family, Friends, Fools
what are angel investors
local and first start ups
what are the differences b/w angels and CV
Seed-stage and startup entrepreneurs tend to seek out angel investors
VC invests in companies in the third early stage of business
How do companies value their companies
- use available tools to assess their company’s worth (location, real estate, IP, patents)
- Value based on its market potential
how do investors value start-ups
investors fund start-ups because
…..
Vocab:
short term load that can be turned into equity
- the initial debt converts to shares of stock
convertible debt
vocab:
valuation becones easier
invesrots mau be entitled to a discount
benefits and advantages
- use personal capital to invest in an enrepreneurial venture
- add value to what they already know
angel investors
types of angel investors
Range from sient investors to those who want full involvement
business angels
types of angel investors
Have started and operated their own businesses
Entrepreneurial angels
types of angel investors
wealthy retired to semiretired entrepreneurs
Enthusiast angels
types of angel investors
entrepreneuers who have achieved success in their own companies
Micromanagment angels
Angel investors
angels pool funds to invest in a venture to work together
- meet regualry to hear pitches and ask questions
spread all over the country and specialize in specific areas
research sugget that women are better investors than men
Angel Groups
what is
professional money managers
* look for opportunities for return on their investments
* Earn thorugh ownership of equity
* fund goes in. a 10 yr cycle
* loove for ventures that have recieved seed funding
* not impossible for startups to receive venture capital
Venture Capitalists
how does venture capital work
- find the right vc for yoru venture
- be prepared with your ideas and goals
*
why might vc say no
Your venture really has to stand out form the crowd
Have a policy to review opportunities only via a referral
what are the expectations for entreprenuers should have
Capital, Collaterial (assets), Capacity, Credit Rating (score)
- banks do not give loans for start ups for the high risk
Vocab:
Rigorous process carried out to evaluate an investment opportunity
* prior to a deal being finalized
Angel investors and groups do not carry out much of this
due to not having enough Time, resource contraints, and lack of info.
Due Diligence
Dual digilence: vocab
What is VCs expect a return when the firm exits the investment
- The oneu is repaid through an IPO, mergers and acquisitions or buyback
- Dual digilence is the final step
Exits/ harvesting
