(Solution)-Sources of Capital to Entrepreneurs


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Main question.- Sources of capital for entrepreneurs. Please go on the following link and discuss 3 things that you feel are of interest to you? https://www.sba.gov/offices/district/nj/newark 1. Using Figure 8.1, describes some of the sources of capital available to entrepreneurs, and discusses how they correlate to the varying levels of risk involved with each stage of the venture. 2. What are the benefits and drawbacks of equity and of debt financing? Briefly discuss both. 3. If a new venture has its choice between long-term debt and equity financing, which would you recommend? Why? 4. Why would a venture capitalist be more interested in buying a convertible debenture for $500,000 than in lending the new business $500,000 at a 4 percent interest rate? 5. What are some of the advantages of going public? What are some of the disadvantages? 6. What is the objective of Regulation D? 7. If a person inherited $100,000 and decided to buy stock in a new venture through a private placement, how would Regulation D affect this investor? 8. Is it easier or more difficult to get new-venture financing today? Why? 9. Some entrepreneurs do not like to seek new-venture financing because they feel that venture capitalists are greedy. In your opinion, is this true? Do these capitalists want too much? 10. Identify and describe three objectives of venture capitalists. 11. How would a venture capitalist use Figure 8.2 to evaluate an investment? Use an illustration in your answer. 12. Identify and describe four of the most common criteria venture capitalists use to evaluate a proposal. 13. In a new-venture evaluation, what are the four stages through which a proposal typically goes? Describe each in detail. 14. An entrepreneur is in the process of contacting three different venture capitalists and asking each to evaluate her new business proposal. What questions should she be able to answer about each of the three? 15. An entrepreneur of a new venture has had no success in getting financing from formal venture capitalists. He now has decided to turn to the informal risk capital market. Who is in this market? How would you recommend that the entrepreneur con- tact these individuals?


Solution ID:10086598 | Question answered on 16-Oct-2016

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