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Flashcards in 5 Financing Deck (13):
1

RECAP

  • business model def=
  • financial plan def=

  • = implemented business strategy
  • = translation of business plan into numbers

2

Total risk, 2 components: 

Business Risk + Financial Risk

(where financial risk is seen as negative, in a balance-sheet assets-liabilities view)

3

mezzanine level

  • def=
  • benefit

  • convertible loans, with conditions
  • adds flexibility for investors & company

4

Financial Planning:

wrong & right approach

+ key ingredient

  • wrong approach:
    only top-down, long-term planning, focused on profits, based on draft business model
  • right approach: 
    also bottom-up, shorter-term planning, focused on revenues, based on detail business model

=> include a translation of the "hockey stick" exponential growth graph... which must be there to inspire hope, but must be also made somewhat credible

5

Funding sources: the 3 to 7 Fs 
+ later sources

  • General
    • Family
    • Friends
    • Fools
  • Typically Swiss:
    • Founder --> expected to invest in CH
    • Faculty
    • Foundations --> cheap source
    • Family offices --> very good source

Later sources:

  • Crowdsourcing
  • Government Programs like the Commission for Technology Innovation
  • Venture capital & private equity

 

6

new shares issuance: exam Qs & As

  • valuation? --> last transaction (virtual price)
  • dilution? --> calculate % of ownership rights based on total issuance... LOL

 

7

equity crowdfunding def=

big advantage:

for who/what?

crowdfunding where equity, rather than products, are offered; not available in all jurisdictions

=> it lets you test your idea

for SW

8

  • key to success... 
  • key to it...

  • selling (ideas, etc.)
  • what to sell? sell passion! --> esp. to investors, who professionally must be passionless

9

ideas VS implementation

ideas are cheap => share them to get help

value is in implementation

10

3 key financial statements

  • cashflow statement --> cash = oxygen
  • income statement --> profit = medium-term food
  • balance sheet --> assets = substance

11

equity vs debt: defs & tradeoff as financing sources

co-ownership & borrowing, w interest, against guarantee

 

debt does not dilute but requires guarantees & drains cash through interests & can be called at worst time

equity does not protect & dilutes --> loss of control, but interests are aligned

12

Cash Burn and Run Rate

run rate = cash available / cash burn = all expenses, w/o considering any payments from customers

13

dilution exercise: 4 aggregate + 2 unitary values to track

invested capital CHF / # shares / ownership % / (post)value CHF

+ nominal & "traded" value of 1 share