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| − | Risk / Return triangle
| + | M3-S7 - Session notes |
| − | * Probability of loss
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| − | * Expected return
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| − | * Investor(s), Entrepreneur(s), Combination, Fit, Agreement
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| − | [[Debt financing|Debt financing]]:
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| − | Debts (& factoring)
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| − | * Repayment plus interest income
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| − | * Provider's upside return
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| − | ** Usually agreed upon percentage
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| − | * Provider's downside risk
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| − | ** Everything
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| − | Positives:
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| − | * Retain control
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| − | * Greater ange of flexibility
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| − | * Lower cost than [[Equity financing|Equity financing]]
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| − | * Simpler for both parties to exit
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| − | Negatives
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| − | * Interest payment
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| − | * Cash flow implications
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| − | * Assets encumbered
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| − | * Personal surety
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| − | * Potential personal liquidation
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| − | [[Equity financing|Equity financing]]:
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| − | * Value of equity stake plus divident income
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| − | * Provider's upside return
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| − | * Provider's downside risk
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| − | * Multiple solutions possible:
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| − | ** Combination of debt + equity
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| − | ** Possibilities to convert it later
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| − | Positives:
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| − | * Low/no cash flow implications
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| − | * Lower personal risk
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| − | * Potential non-financial contribution of investors
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| − | Negatives:
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| − | * Loss of control
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| − | * Costly in long term
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| − | * Difficult / costly to exit
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| − | * M&A risks
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| − | Finance and business stage:
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| − | The American way (no debt financing)
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| − | <html>
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| − | <img src="http://upload.wikimedia.org/wikipedia/commons/thumb/8/8e/Startup_financing_cycle.svg/700px-Startup_financing_cycle.svg.png" "Width=400px"/>
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| − | </html>
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| − | VC Rates of return
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| − | * In the 25% range over 5-8 years
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| − | Split of the spoils:
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| − | * 80% to limited partners, 20% ROI
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| − | * 20% to general partners - <math>6M over 5 years</math>
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| − | Evaluation process:
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| − | * Universal independent market analysis, Opportunities evaluation
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| − | * Technical due diligence
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| − | * Team due diligence
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| − | What characteristics desired in the team?
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| − | * Strong technologist, engineering vision & execution, attention to the minutae
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| − | * Seperate person to drive sales, finance, recruitmet
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| − | * Ware of individuals wedded to a particular role
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| − | * Willingness to step aside for a new CEO, professinoal managers
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| − | * A CEO to take it to glory
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| − | * The quality of people the CEO can attract
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| | [[Category:mbi]] | | [[Category:mbi]] |
