A wider definition would be risk investment in un

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Unformatted text preview: nagement and offering advice. A wider definition would be risk investment in un-quoted companies with high growth potential. Venture capital can be broadly subdivided into seed or start up capital (used to bring a research idea to the development stage), second round finance for young companies (used to expand the range of products) and development capital for established companies (used to develop an alternative product or expand through acquisition). Working capital: The cash resources a company needs to operate as a going concern on a daily basis. Such resources may be internally generated in the form of retained profits or proceeds of sales of assets or provided externally by shareholders, trade creditors and bankers or other financial institutions. 16 Sources of Venture Capital under £250,000 FLOW CHART - THE FINANCE OPTIONS FOR THE ENTREPRENEURIAL BUSINESS Can you improve working capital management to avoid the need YES to raise it all through external finance? NO Are grants available for this project? Is the grant sufficient? YES NO YES NO Do you have a high quality management team or proven track record? NO NO Can it be improved? YES YES Is your business profitable and fast growing? Is factoring suitable? NO NO YES Are you willing to share control? For working capital To buy Fixed Assets NO YES Do you have adequate security and sufficient cover? YES Purpose of To buy Fixed Assets Are there tax or other reasons to lease? YES SOLUTIONS NO Purpose of finance? YES YES NO For working capital Are there tax or other reasons to lease? NO Venture Capital Will cost Base rate + 25% or more Loan Guarantee Scheme Will cost Base rate + 4 to 5% Lease or Hire Purchase Will cost Base rate + 2 to 10% Development capital Sound new ventures Replacement capital Start up capital Rescue capital Term Loan Will cost Base rate + 3 to 5% Bank Overdraft Will cost Base rate + 3 to 7% Factoring Will cost Base rate + 6 to 15% Grant No Finance cost Improve controls No direct borrowing costs Base rate plus = 25% = 35% = 35% = 45% = 50% 17...
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This note was uploaded on 02/27/2013 for the course GBMT 300 taught by Professor Javierwujie during the Summer '12 term at University of Wisconsin.

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