港中大MBA创业金融讲义BOverviewofNewVentureFinancing.ppt

OVERVIEW OF NEW VENTURE FINANCING Overview of New Venture Financing Choosing the organization form One of the earliest decisions Important implications for a variety of factors, including taxes, liability, succession, and ability to attract financing and employees Information problems facing entrepreneur and investors Entrepreneur’s info about the value of the opportunity may be incomplete and uncertain Asymmetric info about the value of the idea and the ability of the entrepreneur Risk of appropriation of intellectual property Unique features for entrepreneurial finance Need tangible evidence of the market potential and entrepreneur’s ability Institution of milestones What is milestone: specific and verifiable performance benchmarks e.g. completion of clinical tests, production of prototype, initiation of sales (as demonstrated in Ir-v case) Unique features for entrepreneurial finance Staging of financing Funds not made upfront and staged and linked to achieving milestone Financing of one stage does not commit an investor to finance additional stages Unique features for entrepreneurial finance Concern over appropriation of intellectual property – note that the reputation of the outside investors for trustworthiness is far more important to the entrepreneur than is a signature on an confidentiality agreement Measuring progress with milestones Understand the difficulties of forecasting cashflows and/or profitability at an early stage Milestones enable the parties to postpone financial commitments until they are needed and to inject funds when meeting the levels of risk and expected return Measuring progress with milestones Milestones – working hypothesis about the venture important to understand the reasons for failing to meet a milestone 1st milestone: concept testing 2nd milestone: completion of a prototype – gain increased understanding of technological bottlenecks, manufacturing costs and materials supply More: first financing, completion of initial pl