Financing the Venture

For an entrepreneur who wants to take a business idea to the next level, one of the biggest challenges lie in securing investment for the growth of a company. Moreover, it is at the startup level that the capital is the riskiest. This paper examines the various financing options available to get a new venture funded, delving into the nitty-gritties of what kind of investors invest at what stage. By reviewing the literature, the paper reveals what type of funding is the most suitable and preferred from the entrepreneur's point of view as well as the investors' perspective.

Journal of Entrepreneurship and Management, 2020

Startup is becoming a trend in our country with the government also recognizing this form of business by providing incentives. However, from the time this idea gained momentum in 2016 with the launch of Start Up India Initiative by the government, not many startups have succeeded. Majority of failures can be attributed to the financial aspects of startups at various stages. Post the initial funding received at the experimental phase, entrepreneurs find it difficult to meet the financing needs at the expansion stage. This particular issue needs to be explored further so that suitable remedies or solutions can be sought. This paper aims at gaining an understanding of various sources of funding available for a startup. The main focus is on selection of funding with regards to different sources, underlined causes for these and to give an insight into what consequences these choices will have on the venture. An attempt has also been made to comprehend the entrepreneur’s perception toward various capital providing institutions. “You need three things to create a successful startup - to start with good people, to make something customers actually want, and to spend as little money as possible.” -Paul Graham

Technovation, 1989

To remedy a shortage of venture capital for the development of emerging hightechnology businesses, the Australian government in 1984 initiated a Management and Investment Companies (/WC) program. Under the program, I I MlCs were licensed to raise venture capital from investors who are aliowed to claim 100% of their investments as a tax deduction. This study identified a rota! of 47 venture capitai organizations of different ownership structures and investment preferences. ~ndoubtediy, the MIC program has played a catalytic role in the rapid deve[opFne~t of ihis market to its current capital base of A$353 miilion. However, there are still segments within the market where venture capita~su~~~y is deficient. Further, the recent stock market downturn has dampened the venture capituI supply general/y. The government initiative in reviewing its policy framework at this juncture is cruciuf in order to remove impediments and create a positive environment conducive to the long-term development of the venture capital market in Australia.

Equity financing in entrepreneurship primarily includes venture capital, corporate venture capital, angel investment, crowdfunding, and accelerators. We take stock of venture financing research to date with two main objectives: (a) to integrate, organize, and assess the large and disparate literature on venture financing; and (b) to identify key considerations relevant for the domain of venture financing moving forward. The net effect is that organizing and assessing existing research in venture financing will assist in launching meaningful, theory-driven research as existing funding models evolve and emerging funding models forge new frontiers.

How should new technology based firms (NTBFs) finance their business? Some high-tech entrepreneurs choose debt instead of equity in order to preserve their chance of high returns in the future, accepting the greater risks involved. However, some experts believe that the riskier the project, the more entrepreneurs should seek VC support. Our work attempts to answer this question and build a framework helping technology-based entrepreneurs match their business plans with the most appropriate financial strategy. We relate to the pecking order and financial rationing theories. Many attempts to understand them have been developed, but with dominant focus on investor's supply and their decisional criteria, and few determinants normally investigated at a time. Our approach is novel because it is firm centric and holistic, evaluating the relationship between firm's profile and the optimal investor. Through multiple indepth case studies on UK NTBFs, and their critical discussion, we provide entrepreneurs with a robust assessment tool to navigate the complex scenario of financial alternatives available to NTBFs. The research investigates and discusses the role played in the fund raising process by entrepreneur's profile, technology, features of the business plan and market; it can also help investors understand entrepreneur's motivations and expectations. Our contribution is twofold: first, the model is made of reliable assessment criteria for complex and ambiguous dimensions such as technological risk and market focus; secondly, we develop a holistic approach with understanding of both the firm's and investor's points of view.

Journal of Business Finance & Accounting, 1991

She wishes to thank Warren Bailey of Cornell University for his useful comments on earlier drafts, and acknowledges the encouragement from various participants at the Northern Finance Association meetings in Ottawa, Canada, in October 1989.

The 3rd European Conference on …, 2008

Venture Capital–Filters, Hubs and Catalysts for Entrepreneurs? A two-sided view on financing innovative, small firms Jesper Lindgaard Christensen Department of Business Studies, Aalborg University, Denmark jlc@ business. aau. dk Abstract: A smooth functioning of capital ...

Venture Capital

This paper reviews the circumstances surrounding the launch of Venture Capital: An International Journal of Entrepreneurial Finance in 1999. It highlights a number of significant changes in the structure of the entrepreneurial finance market over the past 20 years, notably the decline of "classic" venture capital, the effective closure of the small-cap IPO market, the scale-up problem and the emergence of a second equity gap, the geographical dispersion of venture capital and the institutionalisation of the business angel market. A number of new players in the marketcoinvestment schemes, equity crowdfunding platforms and blockchain technology-based Initial Coin Offeringsare discussed and the challenges and opportunities they pose for investors, entrepreneurs, policy makers, regulators and academic researchers are assessed. Against this background, a number of key features of the evolution of the content and focus of the Journal are discussed. The paper finishes with a summary of the papers included in this Special Issue.

The book has been published with all reasonable efforts taken to make the material error-free after the consent of the author. No portion of the book should be reproduced, stored in any retrieval system (including but not limited to computers, disks, external drives, electronic or digital devices, e-readers, websites), or transmitted in any form or by any means (mechanical, recording, electronic, digital version, photocopying, or otherwise) without the prior, written permission of the publisher, nor be otherwise circulated in any form of binding or cover other than that in which it is published and without a similar condition being imposed on the subsequent purchaser.

Venture Capital, 2019