Revenue models - Lecture: Sources of funds

12 important questions on Revenue models - Lecture: Sources of funds

*Understand the two different types of capital and investment and their sources

  • Internal
    • Comes from the entrepreneur itself and the people surrounding
  • External
    • Equity
      • Investor
    • Debt
      • bank

What to sell? --> What is price thermometer

  • Value
    • Incentive to buy
  • Price
    • incentive to sell
  • Cost

How not to run out of money?

  • Stay lean ( dom more with less)
    • cost are in your control, revenue not
  • Know your numbers! Burn and runway
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  • Never study anything twice
  • 100% sure, 100% understanding
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What is Equity finance?

  • Owner sells a stake in the business for cash
  • The investor receives payback through a dividend or capital exit point
  • Sometimes get say in running the business

What are 4 types of venture capital? Explain

  • Institutional venture capital:
    • invest by financial institutions 
  • Business angels:
    • investments by wealthy private individuals
  • Corporate venturing
    • Minority investment by large companies in small firms for strategic reasons
  • Public sector venture capital:
    • Investment with social or welfare aims, as well as financial aims

What are 4 types of investment? Explain

  • Seed stage - prove the concept
  • Early-stage - test /pilot fase
  • Expansion stage -working capital
  • Later stage - stable growth

How do VCs make a profit? Stated the 5 strategies


  • Initial Public Offering - shares for sale to public investors
  • Trade sale - entire firm is sold to another party
  • Secondary sale - sold to another VC
  • Buy bak -  repurchase of shares
  • Write off - no profit

What are three other (alternative)  ways to sources funding?

  • Bootstrapping
    • e.g. Take preorders for a product, using funds generated from the orders to build and deliver. 
  • Crowdfunding
  • Government programs
    • free cash ( very competitive)

What is the definition of 'revenue stream'?

A company's single source of revenue. A company can have zero or many revenue streams depending on its size.

What is the definition of 'revenue model'?

The strategy of managing a company revenue stream and the resource required for each revenue stream.

How to create sustainable value then?

Redefining the value proposition in the context of environmental and social issues may provide companies with new opportunities.

What are the two revenue approaches?

  • Top-down
    • estimate market size
  • Bottom-up
    • Calculate basic budget per key activity

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