Management and Organizational Studies 1023A/B Lecture : MOS 1023 Finance Lecture 2

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1023A/B
• Professor: Maria Ferraro

Document Summary

Debt may give a better return if there is more leverage. Not every company goes through exactly the same cycle. Comes from own money or personal bank loans. Should only last 1-2 yrs (any longer and idea may be fruitless) Lasted 2 yrs for google before acquiring angel investors. Help entrepreneurs take their businesses to the next step. Entrepreneurs are often lacking in business and management skills (mostly engineers etc. ) Invest only if they believe the idea has potential. Most businesses fail (9/10) and bankers (and most investors) are risk averse (only invest if expected return is higher than risk) Only patents and ideas (don"t guarantee future cash flow) Entrepreneurs have more info than banks and banks have no way of determining whether you are a good or bad entrepreneur. Venture capital funding is equity (they become part owner) Investors get preferred stock (get payouts before other stockholders) Venture capitalist understand the risk (they are experts)