VENTURE CAPITAL REVIEWER LESSON 2

24問 • 1年前

問題一覧

- Entrepreneur sells portion of the business ownership - It requires sharing of ownership and profits with the funding source - Investors assume the risk of failure Safer for new business

EQUITY FINANCING

- Informal risk capitalist - Wealthy individuals backup emerging entrepreneurial ventures with their own money and labor hopes of earning high profits when the ventures become successful - Hands on investors providing advice or direct management input

business angels

- first sale of stock by the firm to the public Stock is traded on the stock exchanges/ Market - A firm is not able to go public until it has demonstrated that it is viable and has a bright future Investor Venture Capital - Rich individual investors or groups of investors provide venture capital firms in start-ups and small businesses with exceptional growth potential. - Investment of the venture capitalists are usually in cash in exchange for shares of stocks in the company for a longer time Horizon Venture capitalist participate in business management through membership in the Board of Directors

Initial Public Offering

Venture capital firms are companies that invest money in small businesses operating in particular industries, in which they are familiar with and have high growth and profit potentials. Venture capital firms also look for business with competent management and competitive edge. In return, they expect a significant ownership interest in the business

Corporate Venture Capital

It involves a payback of the funds plus an interest for the use of money. It is stated as a liability in a company’s balance sheet.

Debt Financing

Sources of debt Financing

Bank loans government and financing finance company and other

Characteristic of equity financing

no maturity date dividend payments depends on firms performance shareholders have claims on assets only after the creditors claims shareholders are owners and can influence firm management

Sources of Equity Financing

Business Angels Initial Public offering Corporate venture Capital

Sources of Debt Financing

Banks and Commercial Banks

- Major source of debt financing for small business. - Offers secured and unsecured loans - Provides intermediate term loan. - Short term and long term loans. - Credit Loans. - Inventory Financing

Banks and Commercial Banks

The government has a variety of financing programs for small businesses. The range of financial assistance rendered aims to help SMEs improve their workforce, develop products or technology, promote their product or services and restructure their debts. Government institutions. DBP, LBP, BSP & other GOCC’s.

Government Financing Program

Vendors can extend their credit in the form of delayed payment.

Other Sources Trade credit

-Available to entrepreneurs who do not have collaterals to put up -Center for Agriculture and Rural Development Inc.,(CARD) - Landless People’s Development Fund (LPDF) - Tulay sa Pag-unlad inc., (TSPI

Microcredit Institutions

funds occupy the space between (and thus complement) venture and buyout investing, providing fast-growing but established businesses with funds and support for a transformational leap in their development. It accounts for the largest number of private equity (PE) deals executed in emerging markets. In addition, following the global financial crisis, growth equity investments have gained fresh momentum in developed markets, as they provided an avenue to deploy capital at a time when debt markets were closed. It has moved beyond the start-up stage) in exchange for a minority equity stake. Given the lack of control, a strong working relationship and trust-based partnership between the investors, existing owners, and management are required to achieve the desired outcome: advancing the company to a new stage of development. These dynamics are shown in:

Growth Equity Defined

stakes strategic and operational control of the company will remain with its existing business owners. Typically, it consists of predominantly newly issued shares, although a portion of funding may be used to provide an exit for existing business owners. Only a small subset of growth equity deals results in the PE firm acquiring more than 50% of a company’s equity and benefiting from the ensuing majority shareholder rights. ›The minority equity position of an incoming PE investor shapes all aspects of the investment process, from deal structuring and operational decision-making during the holding period, to the course of action at exit. It is important for minority investors to understand the motivations of the majority shareholders and ensure they are aligned with the fund’s investment thesis, its base case scenario for expansion and its plans for change. Still, focusing on an agreed-upon plan and executing the necessary changes can prove quite challenging from a minority position, even with a good working relationship and appropriate minority shareholder rights in place.

MINORITY EQUITY STAKES

In an ideal scenario, owners, existing management and new investors will form a successful partnership contributing complementary skills that help obtain superior operating results at the portfolio company.

FOCUS ON PARTNERSHIP

growth equity ______ primarily provide liquidity to the owners

does not

Growth equity funds invest in established businesses with _______ and attractive future prospects for expansion. Portfolio companies often operate in expanding economies, in sectors exceeding a country’s average national growth, or in industries ripe for disruption.

proven business models

The capital invested by a growth equity fund is typically used for two purposes:

• To fund specific, value-accretive projects at the portfolio company. • To provide liquidity to the current owners and founders and help simplify its shareholding structure.

Growth equity funds targets to invest predominantly in three types of businesses:

• Late-stage venture capital-backed companies, • Mature small and medium-sized enterprises (SMEs), and • Spin-offs from large corporations.

Growth equity is a crucial ingredient for VC-backed companies that have established a successful business model, claimed a defensible market position and reached profitability in their steady-state operations.

LATE-STAGE VENTURE-BACKED

Mature businesses with a unique competitive advantage and attractive development prospects offer perfect opportunities for growth equity investment. These companies often possess a strong market position with a well-recognized brand and a solid network.

MATURE SMES

Whether a mature SME, a VC-backed company or a corporate spin-off, growth equity portfolio companies share similar levers for _____

value creation

Growth equity has developed into a recognized _____ and ______

.strategy within the PE industry

MONETARY REVIEWER LESSON 1

Shiela Caber · 11問 · 1年前

MONETARY REVIEWER LESSON 1