Section 3 From Business Plan to Funding Venture

Transcript:Section 3 From Business Plan to Funding Venture:
Section 3 From Business Plan to Funding Venture Chapter 9 Funding 4Ps in market mix (Recalled) 1. Product Understand the product; define the product; the first in their category 2. Price Price is the amount that consumers will be willing to pay for a product. Raise or discounting. E.g. UNIQLO 3. Place Place is the consideration of where the product should be available; also refers to advertising. 4. Promotion The goal of promotion is to communicate to consumers that they need this product and that it is priced appropriately. 5 Cs in Bank Lending Decisons Character refers to borrower Capacity refers to the ability of the business to generate revenues to pay back the loan. Capital refers to the capital assets of the business. Collateral is the cash and assets a business owner pledges to secure a loan. Credit Business and personal credit are two different things. Most new businesses have no business credit, so they must use the personal credit of their owners Types of financing available for the private firm For the entrepreneur, financing for the private firm should be considered from the perspective of debt versus equity and using internal versus external funds. Debt financing and equity financing. Internal and external funds Personal funds Family and friends Commercial banks Role of commercial banks Commercial banks are by far the source of short-term funds most frequently used by the entrepreneur when collateral is available. Types of Bank Loans: Accounts Receivable Loans, Inventory Loans, Equipment Loans and Real Estate Loans Cash Flow Financing: Installment Loans, Straight Commercial Loans, Long-Term Loans and Character Loans Bank Lending Decisions: according to the five Cs of lending: character, capacity, capital, collateral, and conditions Research and development limited partnerships A typical R&D partnership arrangement involves a sponsoring company developing the technology with funds being provided by a limited partnership of individual investor(s). Major Elements: the contract, the sponsoring company, and the limited partnership Procedure: the funding stage, the development stage, and the exit stage Benefits and Costs Examples: Syntex Corporation GOVERNMENT FUNDING PROGRAMMES Public Sector Trial Scheme (PSTS): https://www.itf.gov.hk/en/funding-programmes/facilitating-technology/psts/ Research Talent Hub (RTH) https://www.itf.gov.hk/en/funding-programmes/nurturing-talent/research-talent-hub/index.html STEM Internship Scheme: https://www.itf.gov.hk/en/funding-programmes/nurturing-talent/stem-internship-scheme/ Others https://www.success.tid.gov.hk/success_enews/govfundscheme/eng.pdf Funding Source Private Placement Another source of funds for the entrepreneur is private investors, also called angels, who may be family and friends or wealthy individuals. A formalized approach for obtaining funds from private investors is through a private offering.  One alternative to