Unit 1

• The main sources of financing are equity, debt, and hybrid instruments.
• Bootstrapping refers to using financial resources from multiple small contributions from friends and family to get started.
• Debt capital can come from banks or other financial institutions, such as commercial paper, bonds, or notes payable.
• Equity capital is the ownership interest in an organization that represents the residual claim on its assets and earnings.
• Entrepreneurship process of changing ideas into commercial opportunities and creating value
• Entrepreneur individual who thinks, reasons, and acts to convert ideas into commercial opportunities and to create value
• Seed Financing Funds needed to determine whether the idea can be converted into a viable business opportunity
• Startup Financing: The capital needed to start a business.
• Venture Capital - A type of investment that is provided to a business in exchange for a share of the business.
• Venture Capitalists are people who invest in new businesses and take a share of the profits
• Business Angels - A type of investor who provides capital to a business in exchange for a share of the business.
• Investment Bankers - Provide advice to corporations on how to raise capital.
• First-Round Financing Equity funds provided during the survival stage to cover the cash shortfall when expenses and investments exceed revenues
• Second-Round Financing Financing for ventures in their rapid-growth stage to support investments in working capital
• Mezzanine Financing: A type of financing that involves the issuance of debt securities by a company that is not a public company.