Raising capital Flashcards
Types Of Capital
- Financial Capital
- Human Capital
- Intellectual Capital
- Physical Capital
- Real estate
- Securities
5 Common Sources Of
Equity Capital
- Bootstrapping
- Friends and family
- Crowdfunding
- Angel investor
- Venture capital
Sources Of Dept Capital
- Commercial banks
- Government loans
- Short-term loans
- Intermediate and Long-
term loans
Other Methods Of Financing
- Factoring account
receivable - Leasing
- Merchant cash advance
- Peer-to-peer lending
- Credit cards
2 types of Financing
Equity financing
Debt financing
A type of financing where investors provide capital
in exchange for ownership shares or an active
role in the company.
Equity Financing
A form of financing where a company receives a
loan and promises to repay the debt over a
predetermined period.
Debt Financing
The initial stage of a company’s development,
often characterized by high risk and uncertainty.
Startup Phase
A financial metric used to assess a company’s
ability to generate profit relative to its revenue,
assets, equity, or other financial metrics.
Profitability Metric
The stage in a company’s life cycle where it has
established significant market presence and
seeks additional funding to expand further.
Growth Phase
A formal statement often used in the process of
raising capital, detailing a business’s goals,
strategies, and financial forecasts.
Business Plan
An individual who provides small to substantial
amounts of capital to startups, often in exchange
for convertible debt or ownership equity
Angel Investor
A high-risk form of capital typically used in the
later stages of a company’s growth, combining
elements of debt and equity financing.
Mezzanine Capital
The process of raising small amounts of money
from a large number of people, typically via the
Internet.
Crowdfunding
A form of financing in which a company uses its
own earnings to fund its operations and growth,
without external assistance.
Bootstrapping
A detailed report that provides an analysis of a
company’s financial performance, often used by
investors to assess viability.
Financial Report
A private equity investor who provides capital to
companies exhibiting high growth potential in
exchange for an equity stake.
Venture Capitalist
The percentage of a company’s profit allocated to
each outstanding share of common stock,
indicating a company’s profitability
Earnings Per Share
(EPS)
A funding option for startups and small
businesses, which involves receiving funds from
the government.
Government Grant
A stage in a company’s development
characterized by mature operations and a
significant customer base, usually requiring larger
capital to sustain growth.
Maturity Phase
The act of selling a part of a business to another
company or investor to raise capital.
Divestiture
A process whereby a company sells its shares to
the public for the first time.
Initial Public Offering
A legal document that outlines the terms and
conditions of a bond, including the interest rate,
maturity date, and other relevant information.
Bond Indenture
A financial instrument that represents a loan
made by an investor to a borrower, typically used
by corporations and governments to raise capital.
Bond
A situation where a company spends more money
than it is earning over a certain period, often seen
in early-stage companies.
Cash Burn Rate
Reasons To Raise
Capital
- Expansion & competitive
advantage - Investing in research and
development - Seizing opportunity
