lecture 1 part 3 Flashcards
what is seed money
money that comes form the initial stages of a business
where does seed money come from
personal savings
selling assets
friends and family
what consists of the bootstrapping phase
starting to grow your company without any outside capital
stages with a venture capital firm
staged funding, personal investment, exit strategy and risk management
what is the venture capital funding cycle
will require entrepreneurs to increase their own personal funding and provide funding in stages, for example 1.5 mil upfront increasing funds over time till 5mil
what is staged funding
evaluate performance
provide support
risk reduction
what does a personal investment show
confirms confidence
what does skin in the game mean
to have incurred risk by being involved in achieving a goal
what consists of the exit strategy
selling their investment
who can a venture capitalist sell their investment too
strategic buyer
financial buyer
ipo
what is a strategic buyer
someone who create value through synergies between the acquisition and the firm’s existing productive assets
what is a financial buyer
private equity firm
what % of start ups become a going concern
only 10% - 20% of firms
how do venture capital firms manage their risk
staged funding
personal investement
support / advice
multiple investements
syndication
how do multiple investments help a venture capital firm manage risk
need to exit successful firms to cover losses
