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Management and Organizational Studies
Management and Organizational Studies 1021A/B
Terry Biggs

Chapter 7 p. 152-180 Venture capitalists: individuals or firms that help new businesses get started and provide much of their early-stage financing Angels: wealthy individuals who invest their own money in emerging businesses at the very early stage Primary sources of funds for venture capital firm: 1. Private and public pension funds 2. Finance and insurance firm 3. Endowments and foundations 4. Individuals and families Why Venture Capital Funding is Different 1. The high degree of risk involved 2. Types of productive assets (intangible assets) 3. Informational asymmetry problems (lender has little knowledge) Bootstrap financing: entrepreneur supplies funds, prepares business plan, and searches for initial outside funding Seed-stage financing: venture capitalists provide funds to finish development of the concept Early-stage financing: venture capitalists provide financing to get the business up-and- running Latter-stage financing (mezzanine financing): Typically includes one to five additional stages Venture capitalist exit by selling to a strategic buyer, selling to a financial buyers, or selling stock to the p
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