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Loans
Venture & Angel Investment
Credit
Other Types of Financing
Types of Entrepreneurship
100
Where would you go for a SBA (Small Business Association) loan?
A Bank
100
What type of companies are venture capitalists typically interested in and why?
High-growth, high-return companies. Typically technology companies. The reason is because VCs are interested in companies that can eventually go public (IPO) which is where they will make high returns.
100
What is one of the 5 Cs of credit
Character, capacity, capital, collateral, conditions
100
The vast majority of start-ups' main initial funding source is ______?
Informal investors
100
What are three examples of challenges that social entrepreneurs tackle?
Health, education, environment, inequity, hunger, poverty, water, food, women's issues, children's issues, etc.
200
What is the major incentive that motivates banks to grant SBA loans?
The majority of the loan is guaranteed by the SBA (Federal Government)
200
What is the average venture capital investment in the U.S.?
Approximately $9 Million
200
What are the main components of the cash conversion cycle? (Name 2 of the 3)
Inventory, Accounts Receivable, Accounts Payable (2 of 3)
200
Who are the 4 "Fs" of informal investment?
Founder, friends, family, foolhardy
200
What is one of the three main elements of social entrepreneurship?
Involves a new and innovative way of solving a social problem. Requires that any solution be designed from the outset to be part of a financially and organizationally sustainable model. Focused on scale.
300
What can SBA loans be used for? Provide four examples.
Start-up costs, equipment, land, building, refinance or consolidate debt at lower interest, inventory, to finance growth, expansion or renovation, providing seasonal lines of credit, etc.
300
What is an advantage of using an angel investment group vs. an individual angel?
Angel investment groups are much easier to find.
300
What should entrepreneurs strive for in relation to the cash conversion cycle?
More payables - Less receivables!
300
What is one important consideration when using informal investors?
Expectations about time to repay, Future conversion to equity, Risks (worst case scenario), Provide a business plan, Write a note/loan agreement
300
How do family businesses perform when compared to management-controlled firms?
Family-owned businesses outperform management-controlled firms (ROA, ROE, market value)
400
What is factoring?
Selling accounts receivable at a discount to a finance company known as the factor. The factor takes over credit checking and collection.
400
What is typically the biggest issue when negotiating external investment (angel or venture capital)?
Valuation
400
What is one way to encourage more payables and less receivables when you need a source of short-term cash?
Short-term bank loans, negotiating with suppliers, tightening up accounts receivable collections, seasonal business credit terms, trade credit
400
Name two sources of external financing other than loans, venture capital and angel investment.
Services at reduced rates, vendor financing, leased equipment, government programs, reduced rent, customer financing
400
What are three advantages to buying an existing business?
Advantages: Less risky than starting one, Reliable cash flows and profits, Established customer base Reputation, Trained employees, Working systems, procedures, and policies, Easier to get financing, Brand recognition
500
What is Pledging?
Pledging means using accounts receivable as collateral for a loan from a finance company or bank.
500
Who are angel investors (usually)?
Wealthy entrepreneurs and/or wealthy retired successful business people/entrepreneurs
500
What is one primary internal source of funds besides personal savings and cash?
Home equity lines or Credit Cards
500
What is microfinance? Microcredit?
Microfinance is the supply of loans, savings, and other basic financial services to the poor who traditionally lack access to banking and related services. Microcredit involves loaning poor people small amounts of money for use as capital to start or expand small businesses, sometimes called microenterprises.
500
Name one of the two major types of franchises and provide a real life example of it.
Product or Trade Name Franchising The franchisee obtains the right to use the trade name, trademark(s), and/product(s) from a supplier or manufacturer. Used in auto industry, gasoline service station industry, and soft drink bottling. Business Format Franchising Permits the franchisee to use the franchisor’s product(s) and service(s), trade name, trademark(s), AND business format. Used in restaurant, consumer services, etc.