11/25/15

Equity Financing

• What are various sources of equity investments?
  • Super Angels: Well off individuals who have higher amounts of money to invest in innovative ventures.
  • Private Equity: Venture capital, growth capital, mezzanine capital, leverage buyout
  • Public Stock: Holding shares or selling shares from the company.

• What guidelines should entrepreneurs follow when they are selecting a venture capitalist?
  • Scrutinize business with a critical eye
  • Beef up management
  • Keep a high profile so the VCs will visit, attract potential investors
  • Target the search
  • Keep a lookout for smaller VC firms
  • Investigate possible venture partners so when in a meeting it can run smoothly and be successful

• What are the differences between a single-hit and a home-run business?
  • Single-hit:
    • Does not have a sustainable business model
    • Does not have a sustainable product/service
  • Home-run:
    • Long-period business
    • Needs more investing
    • Needs more innovations if you want to continue with new products

• What are the four key factors that a banker seeks before providing a corporate loan?
  • Characters that includes talent, reliability and honesty.
  • Cash Flow to cover debt throughout the term.
  • Collateral to support part of the loan should the company not be able to meet its obligations.
  • Contribution by the entrepreneur towards the funding requirement.