RAISING CAPITAL

Question 1

Refers to the process of gathering capital or financial resources from various sources to support a specific project, venture, or organization. It involves reaching out to potential investors, donors, or lenders to secure the necessary funds required to achieve the company’s goals.

Answer 1

Raising funds o Resource generation

Question 2

IMPORTANCE OF RAISING FUNDS

Answer 2

1. Starting and Sustaining Businesses
2. Expanding Existing Operations
3. Funding Innovation and Development
4. Nonprofit and Charitable Organizations
5. Mitigating Financial Risk
6. Collaboration and Partnerships

Question 3

Refers to the financial assets or funds available to an
entrepreneur or a business. It represents the monetary value that can be invested in various assets, such as equipment, machinery, technology, inventory, or human resources.

Answer 3

Capital

Question 4

Types of Resources

Answer 4

1. Human Resources
2. Physical Resources
3. Intellectual Property
4. Network & Relationships
5. Knowledge
6. Reputation

Question 4

It encompass a broader range of assets beyond just financial capital. They include both tangible and intangible assets that can be used to create value and achieve business objectives

Answer 4

Resources

Question 5

Importance of Identifying and Utilizing the right mix of Capital and Resources

Answer 5

1. Efficiency and Productivity
2. Cost Optimization
3. Competitive Advantage
4. Innovation and Growth
5. Risk Management

Question 6

Identifying Funding Needs (Steps)

Answer 6

Step 1: Prepare a budget
Step 2: Estimate cash flow
Step 3: Analyze your plans

Question 6

Is the total amount of funds that the firm will need for the business to achieve its goal of raising profit.

Answer 6

Capital Requirement

Question 7

Is usually needed for acquiring new
equipment, Research & Development, cash flow enhancement, and company expansion.

Answer 7

Long-Term Financing

Question 8

_____-____ financing with a time
duration of up to one year is used
to help corporations increase
inventory orders, payrolls, and
daily supplies.

Answer 8

Short-Term Financing

Question 9

TRADITIONAL METHODS OF RAISING CAPITAL

Answer 9

1. Bootstrapping
2. Debt Financing
3. Equity Financing
4. Government Grants

Question 10

It refers to the process of starting a company with only personal savings, including borrowed or invested funds from family or friends, as well as income from initial sales.

comes from the iconic expression “to pull oneself up by one’s own bootstraps.”

Answer 10

Bootstrapping

Question 11

Pros of Bootstrapping

Answer 11

1. Full Ownership
2. Greater Control
3. Limited Debt

Question 12

Cons of Bootstrapping

Answer 12

1. Financial Risk
2. Less Credibility
3. Slower Growth

Question 13

Is the act of raising capital by borrowing money from a lender or a bank, to be repaid at a future date.

It also includes peer-to-peer lending, lines of credit and government-subsidized loans

Answer 13

Debt Financing

Question 14

Pros of Debt Financing

Answer 14

1. Retain Control
2. Tax Deduction

Question 15

Cons of Debt Financing

Answer 15

1. Qualification Requirement
2. Discipline
3. Collateral

Question 16

Refers to the sale of company shares in order to raise capital. Investors who purchase the shares are also purchasing ownership rights to the company.

Can refer to the sale of all equity instruments, such as common stock, preferred shares, share warrants, etc.

Answer 16

Equity Financing

Question 17

Equity Financing can be raise from:

Answer 17

• Angel Investors
• Venture Capital
• Initial Public Offerings or IPOs

Question 18

Pros of Equity Financing

Answer 18

1. Less Burden
2. Learn and Gain from partners

Question 19

Cons of Equity Financing

Answer 19

1. Loss of Control
2. Share Profit

Question 20

Is money that’s given to your business by the
government.

Are essentially free money – you don’t have to pay them back. Their aim is to give businesses a helping hand.

Answer 20

Government Grants

Question 21

Pros of Government Grants

Answer 21

1. Non-Repayable Funds
2. Targeted at businesses not supported elsewhere

Question 22

Cons of Government Grants

Answer 22

1. Competitive and Time-consuming application process
2. Limited Availability

Question 23

ALTERNATIVE METHODS OF RESOURCE GENERATION

Answer 23

1. STRATEGIC PARTNERSHIPS AND COLLABORATIONS 2. BARTERING AND TRADE AGREEMENTS 3. LEVERAGING THE GIG ECONOMY AND FREELANCERS 4. CROWDFUNDING AND CROWDSOURCING

Question 23

Investors have specific criteria that they use to evaluate investment opportunities, and understanding these criteria can help you create a business plan that is more likely to attract investment.

Answer 23

Understanding Investor Expectation and Criteria

Question 24

Is important because it helps investors understand how you plan to execute your business plan and achieve your goals.

Answer 24

Outlining the project’s timeline and team milestones

Question 25

helps investors understand your business and the opportunity that it presents. A clear and concise business plan can help you communicate your vision and goals in a way that is easy to understand and compelling.

Answer 25

Presenting a clear and concise business plan

Question 26

Investors want to know that there is a market for your product or service and that it has the potential to generate revenue. You can show investors that you have a clear understanding of your target market and how you plan to reach them.

Answer 26

Articulating the value proposition and market potential

Question 27

Outline the budget and funding requirements. Present a breakdown of expenses and clearly indicate how the requested funding will be allocated to support the different aspects of the project.

Answer 27

Demonstrating financial projections and return on investment

Question 28

It’s important to be honest and transparent. Investors want to see that you have identified the potential risks associated with your business and that you have a plan in place to mitigate those risks.

Answer 28

Addressing potential risk and mitigation strategies

Question 29

Is essential as it allows you to not only have the possibility of securing the resources needed for the start up of a company, it also creates the opportunity to have a mutually beneficial partnership that would help you through the journey of reaching your goals as an entrepreneur.

Answer 29

Building investor relationships

Question 29

Importance of Having Good Relationship with Investors

Answer 29

1. Access to resources and expertise 2. Increased Credibility 3. Better Decision-Making 4. Long-Term Support 5. Increased Funding Opportunities

Question 30

Types of Networking Events

Answer 30

- Conferences - Industry-specific seminars

Question 31

Building Investor Relationship

Answer 31

1. Networking and attending industry events 2. Engaging in investors pitch sessions and meetings 3. Nurturing long-term investor relationships

Question 32

Steps in preparing for a pitch session

Answer 32

1. Research your audience 2. Get your pitch ready 3. Focus exclusively on important points 4. Prepare to deliver pitch clearly 5. Prepare follow-up materials

Question 33

ESTABLISHING FINANCIAL CONTROLS AND SYSTEMS

Answer 33

- Clear Financial Policies - Segregation of Duties - Internal Auditing - Documented Processes

Question 34

TRACKING AND MANAGING CASH FLOW

Answer 34

- Cash Flow Forecasting - Receivables and Payables Management - Expense Control

Question 35

MONITORING AND MEASURING KEY PERFORMANCE INDICATORS (KPIS)

Answer 35

- Identification of Key Metrics - Regular Reporting - Data Analysis: