Module 1.1.2 - Principles Of Finance PDF
Document Details
Ateneo de Manila University
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Summary
This document, likely lecture notes or a presentation, provides an introduction to finance for entrepreneurs. It covers key principles like compensation to investors, opportunity cost, time value of money, risk and reward, and different financing stages.
Full Transcript
Module 1.1.2 INTRODUCTION TO FINANCE FOR ENTREPRENEURS FINN 117 - Entrepreneurial Finance Principles of Entrepreneurial Finance FINN 117 - Entrepreneurial Finance #1 REAL, HUMAN, AND Compensation to Investors FINANCIAL CAPITAL...
Module 1.1.2 INTRODUCTION TO FINANCE FOR ENTREPRENEURS FINN 117 - Entrepreneurial Finance Principles of Entrepreneurial Finance FINN 117 - Entrepreneurial Finance #1 REAL, HUMAN, AND Compensation to Investors FINANCIAL CAPITAL MUST Opportunity Cost BE RENTED FROM OWNERS Time Value of Money FINN 117 - Entrepreneurial Finance #2 RISK AND EXPECTED REWARD GO HAND IN HAND High risk, high reward FINN 117 - Entrepreneurial Finance #3 WHILE ACCOUNTING IS Accounting - Long Run Cash - Day-to-day THE LANGUAGE OF BUSINESS, CASH IS THE CURRENCY Cash Burn FINN 117 - Entrepreneurial Finance #4 NEW VENTURE FINANCING More research is required INVOLVES SEARCH, Private Financial Markets NEGOTIATION, AND PRIVACY FINN 117 - Entrepreneurial Finance #5 A VENTURE’S FINANCIAL Free Cash OBJECTIVE IS TO INCREASE Free Cash Flow VALUE FINN 117 - Entrepreneurial Finance #6 IT IS DANGEROUS TO Incentives should be aligned with self-interest ASSUME THAT PEOPLE ACT AGAINST THEIR OWN SELF-INTERESTS FINN 117 - Entrepreneurial Finance #7 VENTURE CHARACTER AND A good reputation leads to a good business REPUTATION CAN BE ASSETS OR LIABILITIES FINN 117 - Entrepreneurial Finance Life Cycle of a Successful Venture FINN 117 - Entrepreneurial Finance Life Cycle of a Successful Venture 1. Development stage 2. Startup stage 3. Survival stage 4. Rapid-growth stage 5. Early-maturity stage FINN 117 - Entrepreneurial Finance #1 Development Stage Every venture begins with an idea What is your idea? Where do you go to? Type of Financing: Seed Financing FINN 117 - Entrepreneurial Finance #2 Startup Stage Organization of internal and external systems Revenue Model Type of Financing: Startup Financing FINN 117 - Entrepreneurial Finance #3 Survival Stage Revenue Starts to grow Financial Statements become more important Type of Financing: First-Round Financing FINN 117 - Entrepreneurial Finance #4 Rapid Growth Stage Revenue rapidly increases more than expenses Free Cash increases Type of Financing: Second-Round Financing Mezzanine Financing - funds acquired for plant expansion, marketing expenditures, working capital, and product or service improvements. FINN 117 - Entrepreneurial Finance #5 Early Maturity Stage Cash inflows slow down Sell, Merger or Remain Type of Financing: Seasoned Financing - usually are loans from commercial banks or through new issues of bonds and stocks, usually with the aid of investment bankers. FINN 117 - Entrepreneurial Finance
