emm 12 class Twelve Marketing and Raising Money

emm 12 class Twelve Marketing and Raising Money -...

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Entrepreneurial Marketing emm12 Marketing & Raising Money
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Topics lecture/discussion Who provides capital Equity vs debt Banks & VCs Angel investors Marketing & fund raising Discuss the “Leader” case
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SEI Student Evaluation of Instruction You get an Email re: SEI *.Click Class schedule for this term Evaluation button next to this class BUSML 4241 Complete 10 items, add comment * Click the Submit button . Thanks- This is Important
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If you were starting a company… Where would you go for money?
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Raising $ “Raising venture capital is a fulltime job Betty Kadis , cofounder Wakefield UK Software firm
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and not always Fun
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Who provides $ ? Management. 62% Banks. 26% “Angels”. 8% Professional VCs. 4% Survey 400,000 private firms
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Credit Cards Start-ups often have limited collateral, making credit cards one of the only sources of financing for getting off the ground. The Kauffman Foundation found that almost half of all small businesses rely on personal credit cards for financing Sergey Brin used his personal credit cards as a college student in the 1990s to start Google
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Banks If you want to know the real value of money, go and try to borrow some . Ben Franklin A bank is a place where they lend you an umbrella in fair weather and ask for it back again when it begins to rain . Robert Frost
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Debt Financing Advantages : no dilution (not owners), interest paid is tax deductible. Disadvantages : must be repaid, whether profitable or not; loan “covenants” may impact future actions.
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Banks 25-60 % of assets maybe; security critical. Line of Credit, up to X limit, based on sales, receivables and other results SBA guarantee, e.g. 70-80% of bank loan. personal guarantees required Check your credit score Special programs: minorities, females
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Equity financing You and your senior managers Relatives, friends “Angel” Investors Professional Venture Capitalists
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Advantages: cheap (at first), holders share risk/reward with you, no need to be repaid . Disadvantages: dilution (you own less), hard to come by during start-up(no track record), new “partners”(voice in decisions)… Equity Financing*
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Skin in the Game Be prepared to expose most (so failure hurts) of your financial resources …. Investors and lenders will want you to have a significant amount at risk so you share the pain of loss as well as the upside of success
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The VC “funnel” In a typical year Business Plans seen 500 Analyst screens: plan coherent? upside exciting?
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