BU121 Lecture 6: BU121 week 6.docx
Document Summary
Seven principles of entrepreneurial finance: real, human, and financial capital must be rented" from owners. They expect a return that is comparable to what they could get somewhere else: risk and expected reward go hand in hand. Incredibly high risk they"ll expect a return that compensates: while accounting is the language of business, cash is the currency, new venture financing involves search, negotiation, and privacy. Constantly searching for funding: a venture"s financial objective is to increase value. Prove that there"s value so that money will come and you can exit and get the value (free cash flow) It"s dangerous to assume that people act against their own self-interest: venture character and reputation can be assets or liabilities. Seed financing originally came from the owner, family, friends. Start-up stage: use angel investors and venture capitalists. Angel an individual who is a self-made millionaire that has money to invest (like the dragons)
