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Entrepreneurial Finance > Ch 01 Key Terms > Flashcards

Ch 01 Key Terms Flashcards

1
Q

Bridge financing

A

temporary financing needed to keep the venture afloat until the next offering

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2
Q

Business angels

A

wealthy individuals operating as informal or private investors who provide venture financing for small businesses

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3
Q

Commercial banks

A

financial intermediaries that take deposits and make business and personal loans

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4
Q

Development stage

A

period involving the progression from an idea to a promising business opportunity

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5
Q

Disruptive innovation

A

an innovation that creates a new market or network that disrupts and displaces an existing market or network

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6
Q

e-commerce

A

the use of electronic means to conduct business online

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7
Q

Early-maurity stage

A

period when the growth of revenue and cash flow continues but at a much slower rate than in the rapid-growth stage

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8
Q

Early-stage ventures

A

firms in their development stage, startup stage, survival stage, or just entering their rapid-growth stage

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9
Q

Entrepreneur

A

individual who thinks, reasons, and acts to convert ideas into commercial opportunities and to create value

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10
Q

Entrepreneurial finance

A

application and adaptation of financial tools and techniques to the planning, funding, operations, and valuation of an entrepreneurial venture

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11
Q

Entrepreneurial opportunities

A

ideas with potential to create value through different or new, repackaged, or repositioned products, markets, processes, or services

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12
Q

Entrepreneurial process

A

developing opportunities, gathering resources, and managing and building operations with the goal of creating value

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13
Q

Entrepreneurship

A

process of changing ideas into commercial opportunities and creating value

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14
Q

Financial distress

A

when cash flow is insufficient to meet current debt obligations

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15
Q

First-round financing

A

equity funds provided during the survival stage to cover the cash shortfall when expenses and investments exceed revenues

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16
Q

free cash

A

cash exceeding that which is needed to operate,
pay creditors, and invest in assets

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17
Q

Free cash flow

A

change in free cash over time

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18
Q

Gig economy

A

where individuals accept short-term job assignments or “gigs” instead of having fulltime employment

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19
Q

Government assistance programs

A

financial support, such as low-interest-rate loans and tax incentives, provided by state and local governments to help small businesses

20
Q

Initial public offering (IPO)

A

a corporation’s first sale of common stock to the investing public

21
Q

Innovation

A

introduction of a new idea, product, or process

22
Q

Investment banker

A

individual working for an investment banking firm who advises and assists corporations in their security financing decisions and regarding mergers and acquisitions

23
Q

Investment banking firms

A

firms that advise and assist corporations regarding the type, timing, and costs of issuing new securities

24
Q

Mezzanine financing

A

funds for plant expansion, marketing expenditures, working capital, and product or service
improvements

25
Q

Owner-debt holder conflict

A

divergence of the owners’ and lenders’ self-interests as the firm gets close to bankruptcy

26
Q

Owner-manager (agency) conflicts

A

differences between manager’s self-interest and that of the owners who
hired him

27
Q

Private financial markets

A

where customized contracts or
securities are negotiated, created, and held with restrictions on how they can be transferred

28
Q

Public financial markets

A

where standardized contracts or
securities are traded on organized securities exchanges

29
Q

Rapid-growth stage

A

period of very rapid revenue and cash flow

30
Q

Seasoned firms

A

firms with successful operating histories and operating in their rapid-growth or maturity life cycle stages

31
Q

Seasoned securities offering

A

the offering of securities by a firm that has previously offered the same or substantially similar securities

32
Q

Second-round financing

A

financing for ventures in their
rapid-growth stage to support investments in working
capital

33
Q

Secondary stock offering

A

founder and venture investor
shares sold to the public

34
Q

Seed financing

A

funds needed to determine whether an idea can be converted into a viable business opportunity

35
Q

Sharing economy

A

where individuals share their assets, such as homes, vehicles, and personal time, with others to provide a new way for distributing goods and services

36
Q

Startup financing

A

funds needed to take a venture from having established a viable business opportunity to initial production and sales

37
Q

Startup stage

A

period when the venture is organized and developed and an initial revenue model is put in place

38
Q

Survival stage

A

period when revenues start to grow and help pay some, but typically not all, of the expenses

39
Q

Trade credit

A

financing provided by suppliers in the form of delayed payments due on purchases made by the venture

40
Q

Venture capital

A

early-stage financial capital often involving substantial risk of total loss

41
Q

Venture capital firms

A

firms formed to raise and distribute venture capital to new and fast-growing ventures

42
Q

Venture Capitalists (VCs)

A

individuals who join in formal, organized firms to raise and distribute venture capital to new and fast-growing ventures

43
Q

Venture law firms

A

law firms specializing in providing legal services to young, fast-growing entrepreneurial firms

44
Q

Venture life cycle

A

stages of a successful venture’s life from development through various stages of revenue growth

45
Q

Warrants

A

call options issued by a company granting the holder the right to buy common stock at a specific price for a specific period of time

Entrepreneurial Finance (1 decks)

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