Lesson 1 part 2

Question 1

refers to the difference between the funding required by a business, particularly early-stage startups or small enterprises, and the available capital from traditional financing sources, such as bank loans or personal savings.

Answer 1

Capital Gap

Question 2

This funding shortfall can hinder a company’s growth and development, limiting its ability to execute business plans, invest in research and development, or expand operations.

Answer 2

Capital Gap

Question 3

Types of Capital Gaps

Startups and newly established businesses often face challenges in securing initial funding for their operations. Traditional lenders and risk-averse investors may hesitate to support unproven concepts

Answer 3

Early-Stage Capital Gap

Question 4

Types of Capital Gaps

As businesses progress beyond their initial stages and seek funds to scale their operations, they might encounter a ——–. The need for larger amounts of capital to expand can surpass what traditional financing sources are willing to provide.

Answer 4

Growth-Stage Capital Gap

Question 5

Types of Capital Gaps

Companies engaged in research and development activities may struggle to secure funding for innovation initiatives, hindering their ability to develop new products or technologies

Answer 5

Innovation and Research Capital Gap

Question 6

Causes of Capital Gap

Early-stage ventures are often associated with higher risks due to uncertain market acceptance and unproven business models.

Answer 6

Risk Perceptions

Question 7

Causes of Capital Gap

Traditional lenders typically require ——— to secure loans. For startups without significant tangible assets, this can be a barrier to obtaining financing.

Answer 7

Lack of Collateral

Question 8

Causes of Capital Gap

Businesses operating in niche markets or industries with limited access to customers may find it challenging to attract investors or secure sufficient funding.

Answer 8

Market Barriers

Question 9

Consequences of the Capital Gap

The lack of adequate funding can impede a business’s growth prospects. Insufficient capital may prevent hiring new employees, expanding into new markets, or investing in marketing efforts.

Answer 9

Stunted Growth

Question 10

Consequences of the Capital Gap

Insufficient funding for research and development can hinder a company’s ability to innovate, leading to reduced competitiveness and missed opportunities

Answer 10

Innovation Roadblocks

Question 11

Consequences of the Capital Gap

The capital gap increases the risk of business failure, as companies may struggle to cover operational costs or adapt to changing market conditions.

Answer 11

Survival Challenges

Question 12

Mitigating the Capital Gap:

Entrepreneurs can explore alternative funding options such as angel investment, venture capital, crowdfunding, or grants from government agencies or private foundations.

Answer 12

Alternative Funding Sources

Question 13

Many governments offer support programs to address capital gap challenges, providing grants, subsidies, or low-interest loans to startups and small businesses

Answer 13

Government Initiatives

Question 14

Companies can adopt strategies like bootstrapping (self-funding), lean operations, and strategic partnerships to manage their capital needs more effectively

Answer 14

Business Strategies

Question 15

Overview of the Philippine VC and PE Landscape:

involves financing early-stage startups,

Answer 15

Venture Capital

Question 16

Overview of the Philippine VC and PE Landscape:

focuses on mature companies seeking expansion or restructuring

Answer 16

Peivate Equity

Question 17

Major VC and PE Firms:

Answer 17

• Foxmont Capital Partners
• Ayala Corporation
• ADB Ventures
• Gobi Partners
• ICCP Venture Partners
• First Asia Venture Capital
• Quest Ventures
• JGDEV Digital Equity Ventures

Question 18

Sectors that attract significant VC and PE investments:

Answer 18

• Fintech
• E-commerce
• Food and Beverage
• Healthtech

Question 19

Awareness and Understanding

The education system may not adequately cover concepts related to VC and PE, leaving entrepreneurs with little exposure to these alternative forms of financing.

Answer 19

Educational Gaps

Question 20

In some cases, risk aversion within the local business culture might discourage entrepreneurs from seeking external investments and opting for safer, traditional financing

Answer 20

Cultural Factors

Question 21

The absence of prominent success stories in the VC and PE space may lead to skepticism and uncertainty among entrepreneurs about the effectiveness of these funding models.

Answer 21

Lack of Success Stories

Question 22

The shortage of experienced intermediaries who can guide entrepreneurs through the VC and PE landscape can contribute to the lack of awareness and understanding

Answer 22

Lack of Intermediaries

Question 23

Foreign Investment Regulations and Legal Complexities

Answer 23

Regulatory Hurdles

Question 24

Certain industries in the Philippines have restrictions on foreign ownership, limiting the participation of foreign investors in crucial sectors.

Answer 24

Ownership Restrictions

Question 25

Lengthy and complex ---------- ------- for obtaining necessary permits and approvals can discourage foreign investors and slow down investment activities

Answer 25

Bureaucratic Processes

Question 26

---------- or inconsistencies in laws and regulations related to foreign investment can create confusion and deter investors who seek clarity and stability

Answer 26

Ambiguities in Laws

Question 27

Foreign exchange controls and restrictions on repatriation of funds can impact the ease with which investors can exit their investments.

Answer 27

Currency Controls

Question 28

Availability of High-Quality Investment Opportunities

Answer 28

Deal Flow

Question 29

Local entrepreneurs in the Philippines often lack sufficient awareness and understanding of venture capital (VC) and private equity (PE) as viable sources of funding.

Answer 29

Awareness and Understanding