Week 1

Question 1

What is entrepreneurial finance

Answer 1

Entrepreneurial finance focuses on the financial management of a venture as it moves through its life cycle, beginning with its development stage and continuing to when the entrepreneur exits the venture

Question 2

Corporate finance vs. Entrepreneurial finance

Answer 2

• Entrepreneurial finance deals with financial decision making by entrepreneurs rather than decision making by managers of public companies
• It focuses on evaluating investments and financing decisions in a new venture
• Investors are active rather than passive
• Incentive problems are addressed by contracts and close monitoring
• Monetizing the investment is important and hard

Question 3

Successful entrepreneurs’ Personal Traits

Answer 3

• Sees and seizes a commercial opportunity
• Tends to be doggedly optimistic
• Plans to obtain the physical, financial, and Human Resources needed for the venture to be successful
• Has a clear focus on how strategic choices and implementation decisions affect rewards

Question 4

External funding sources

Answer 4

1. Angel financing provided by high-net-worth individuals
2. Accelerators and incubators
3. Venture capital provided by venture capitalist
4. Bank or corporate venturing
5. Crowdfunding
6. Fintech P2P lending
7. Assets-based leaders
8. Private placements
9. Public equity (initial public offering) and bonds

Question 5

External financing decisions by early stage firms

Answer 5

Firms with more expenditures/profits/ growth orientation are more likely to get finance

Banks are hesistant on financing start-ups while venture capitalists are more likely to fund innovative and start up firms