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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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'?
What is the definition of 'revenue model'?
How to create sustainable value then?
What are the two revenue approaches?
- Top-down
- estimate market size
- Bottom-up
- Calculate basic budget per key activity
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