Finance - Phases of development
13 important questions on Finance - Phases of development
Where does the extent of funding depends on?
- Nature of technology
- Market of the venture
Describe the pre-seed phase (main goal, source funding, budget)
- Developing preliminary product ideas
- Avoid investment and use bootstrap financing (FFF)
- 10.000 euro
Why are only a few professional sources of capital interested in the pre-seed phase?
- High risk (too time-consuming with low gains)
- Low sums of money
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What do entrepreneurs in the pre-seed phase to limit their funding requirements?
- Hire, lend or rent equipment
- Use existing resources
What is the definition of bootstrap financing?
- Personal savings
- Mortgages (hypotheken)
- Loans from family and friends
Describe the seed phase (main goal, budget, source funding)
- Develop the product
- 100.000 euro
- Business angels
What are business angels?
Why does the added value of a business angel goes beyond finance?
- Experience
- Expertise
- Business network
- Positive influence on venture capitalist investments
Describe the start-up phase (main goal, budget, costs, source of finance)
- Start the business
- 1.000.000
- Start-up costs: accomodation, equipment, daily costs (salaries, electricity)
- Business angels + informal investors
What are formal investors?
Describe the expansion phase (main goal, budget, source of finance)
- Growth of the business
- > 10.000.000
- Venture capitalists
What are venture capitalists?
Describe the consolidation phase (main goal, source of finance)
- Sustain growth
- Organic growth, acquisition, merger, sale of the business, IPO
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