1. What are various sources of equity investment?

Super-angels, who invest their own funds rather than managing money for others. Invest higher amounts compared to angels. Public stock, either by holding shares in a publicly traded company or by selling some of your company stock to raise further money. Private equity that includes venture capital, leverage buyout, growth capital, distressed or special situations and mezzanine capital.

2.  What guidelines should entrepreneurs follow when they are selecting a venture capitalist?

• Scrutinize you business with a critical eye
• Beef up management
• Keep a high profile so the VCs will visit
• Target the search
• Keep a lookout
• Investigate possible venture partners

3. What are the different between a single hit and a home-run business?

A home-run business requires investing more and more capital over a long period and the investment returns are poor. Whereas a single hit,  you build “essential” assets for an early sale to a larger company in two or three years.

5. What are the four key factors that a banker seeks before providing a corporate?

• Character which includes such traits as talent, reliability, and honesty.
• Cash flow to cover debt service must be available throughout the term of the obligation.
• Collateral to support at least part of the loan should the company be unable to meet its obligations.
• Contribution by the entrepreneur towards the funding requirement.

1. What sources of funding are available to entrepreneurs at the early stage of the company?

Self-funding, moonlighting and consulting (bootstrapping), family and friends, angels, micro-equity and micro loans, banks loans, factoring and supplier funding, personally secured bank loans, government sources of funding .

2. What are “virtual” companies? What tools help them function? Why are they of interest to an entrepreneur?

A virtual company is a company that has no office, very few employees, no communication costs, low legal costs. Companies like these highly rely on tools from the internet (skills, software, social media).For the entrepreneur,  the aim is to reduce the level of monthly fixed costs to a minimum, and be more flexible.

3. Describe seven techniques for bootstrapping that you could use if you started a company.

• No or low rent: for example working from home, co-working space/incubator
• Bartering for goods and service: offer something in exchange of something else
• Trading intellectual property rights
• Renting or leasing equipment
• Used equipment
• Access to expensive equipment: university or government labs
• Outsourcing 

4. Why is bootstrapping important for (a) closely held companies and (b) early-stage, high-growth companies seeking equity investors?

Bootstrapping is important for closely held companies because this way, they keep costs lower and the company can grow without any investors and the owner(s) doesn’t lose control of the business. It is an organic way of growing. However, bootstrapping might also be important for early-stage high-growth companies seeking equity investors because you can show the investors how viable the project is and they are more likely to invest in something they know the owner takes seriously and has been able to keep growing on his own.

5. What is meant by factoring of purchase orders? 

You get funding for operations from a private lender securing these loans with the orders you already have. When you customers pay you, the cash goes directly to the lender. He then takes back the amount plus interest and hands you back cash, if any left.

6. How can suppliers help in providing working capital?

If you make sure you will purchase from them, they might offer a credit.

1. What financial measurements should be prepared to measure company performance?

Budgets, cash flow forecasts, breakeven analysis, measuring sales volume, measuring profits, and measuring cash generated.

2. What are the categories and steps in preparing a financial budget?

• 1. Sales
• 2. Cost of Goods Sold
• 3. Gross Profit 
• 4. Operating Expenses
• 5. Operating Profit/Loss
• 6. Other Income and Expenses
• 7. Pretax Income
• 8. Income Taxes (management’s estimates of what taxes will be owed on its earnings.)
• 9. Net Income (the amount available for dividends or reinvestment in the company)
• 10. EBIT (earnings before interest expense, interest income, and income taxes. It measures the profitability of the company’s current operations as if it had no debt or investment.)
• 11. EBITDA (earnings before interest expense, interest income, income taxes, depreciation, and amortization. It measures the profitability of a company’s operations without the impact of its debt, investments, and long-term assets)

4. Describe the breakeven technique in the decision-making model to determine profit and loss.

The breakeven technique helps the entrepreneur determine whether a certain volume of output will result in a profit or loss. the point at which breaking even occurs is the volume of output at which total revenues equal total costs. To use this technique you need only know the fixed costs of operation, variable costs of production, and price per unit.

A quick way to calculate the breakeven point is to use the following formula. The price per unit (P) multiplied by the number of units sold (X) is equal to the fixed costs (F) plus the variable costs (V) multiplied by the number of units produced expressed by the following formula:

P(X) = F + V(X)

6. Why is building a corporate culture to match a company’s mission important?

Because the ability to lead an organization on a mission where everyone is involved every day in moving toward clearly defined goals makes the difference between success and failure.

7. Select six leadership attributes that you feel are the most important when building a strong culture. Why?

Honesty is important because people within an organization need to trust their environment. I believe alignment is important since employees need to understand the goals/objectives of the company they work for. Teams in order to increase performance. Empowerment and support  will make employees feel better on the workplace and make they more inclined to generate new ideas. Good communication eases interaction among the whole business and make the company faster to respond to problems.

8. Name three important factors that you must take into account when hiring key people.

• Do they have the necessary skills?
• Do the have the will/determination?
• Are they going to fit in the existing team?

1. Name three factors that impact how a new technological innovation fits existing market conditions

• Path dependency: the future is an extension of the past, and you must take into account the history of developments that are already embedded in commerce. For example the keyboards. There have been other ones (that are even better) but nobody uses them because they are so used to QWERTY keyboards already.

• Network effects which means that the more people use a service/product, the higher the value for the new users.

• Government regulations

3. Name 2 factors that impact the “market window of opportunity. “

• The hype cycle
• The technology adoption cycle

5. Name a product that is currently being used by early adopters only.

I would say Apple Pay. It is available for customers to use since 2014. But only a few people are using it for now.