The Quest for Capital!

Lesson 13

Slide 13A

What Does That Mean?

Term Definition financial capital money used by entrepreneurs and businesses

to buy what they need to produce their products or to provide their services.

seed money financial capital given by family or friends to an entrepreneur to start a business or fund the very early stages of product development.

angel capital money that fills the gap between seed funding and formal venture capital.

crowdfunding funding a project or venture by raising small amounts of money from many people via an online service.

Slide 13B

What Does That Mean?

Term Definition

venture capital VC; money provided by investors to startup firms with long-term growth potential.

private equity equity (ownership) in a company that is not publicly traded on a stock exchange.

private company

a company whose ownership is private; its shares are not publically traded.

public company a company which has issued stock that is traded on a stock exchange.

Slide 13C

What Does That Mean?

Slide 13D

Term Definition

exit strategy the planned method by which a venture capitalist intends to recoup the money they invested in a company.

revenue income from the sale of goods or services.

initial public offering

IPO; the first sale of stock by a company to the general public; the process by which a private company converts to a publicly traded company.

pitch deck slide presentation given to a venture capital firm with the goal of obtaining capital.

Reminder Slide 13E

Remember to visit http://c21student.com/flashcards/

to access the online flashcards!

Lesson 13 Objectives

Define financial capital.

List four sources of capital to fund a startup.

Explain how an investor recovers their investment in a startup.

Create a pitch deck for presentation to venture capitalists.

Write a basic 4P marketing plan for a product.

Slide 13F

QuestionQ: What happens to an innovation if there is no money available to complete product development and launch the business?

Slide 13G

a. the innovator cannot complete the project and is forced to give upb. the business has a weak start and failsc. another innovator with a similar product or service and beats them to the market d. any of the above

Slide 13H

Capital = $

Seed money

Crowdfunding (i.e.. Indiegogo, Kickstarter)

Angel capital (angels and superangels, investing agendas)

Slide 13I

Venture Capital “VC” is essential to 21st century innovation

Direct investment in a startup company

Venture capitalists take equity interest and often some level of managerial control

Venture Capital vs. Private Equity

Exit Strategies sets out terms of how the

investor will recoup their investment in the startup + profit

strategies include cashing out on sale to or merger of startup with another company

IPO (Initial Public Offering)

Slide 13J

The Big PictureSlide 13K

Availability of capital is critical for innovation and the growth of commerce. Types and sources of capital are crowdfunding, angel capital, SBA guaranteed business loans, venture capital, and IPOs. Venture capitalists are startup investors who have an interest or expertise in a particular industry. Private equity firms work with established companies to raise money and improve performance through a merger with or acquisition of another company. Angels, venture capitalists, and private equity firms take an equity interest (shares) in a company. They accept the risk of loss, but hope to be rewarded with a high return on their investment (ROI). An IPO is the process by which a privately held company converts to a company whose shares are publicly traded on a stock exchange. An IPO raises a lot of capital for the growth of the company, and often a high ROI for investors.

Ponder and Predict

You hear the words “Wall Street” pretty often – in the news, or in movies and TV shows. What is Wall Street? Is it a real street? Where is it, and what’s that wall about?

Slide 13L