Business Incubators in Romania

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Table of Contents

Introduction4

Chapter 1. Financing Sources and Business Incubators5

1.1.Financing Sources5
1.1.1.Ways to raise money5
1.1.2.How raising capital varies with a firm's life cycle8 1.1.3.Conclusions9
1.2.Business Incubators10
1.3.Incubators in Romania12
1.3.1.Overview12
1.3.2.Legal Framework12

Chapter 2. UNDP’s Business Incubators20

2.1.The United Nations (UN)20
2.2.The United Nations Development Programme (UNDP)22
2.3.Establishment and Development of Business Incubators in Romania23 2.4.Case Study – S.C. Box S.R.L.25

Conclusions35

References36

Appendix 1. Business Plan – S.C. Box S.R.L.38

List of Abbreviations

CV – Curriculum Vitae

E.g. – For example

EU – European Union

GD – Government Decision

GO – Government Order

I.e. – Id est

IPO – Initial Public Offering

MDG – Millennium Development Goal

NASMEC – National Agency for Small and Medium Sized Enterprises and Cooperation

NBIA – National Business Incubation Association

ROA – Return on Assets

ROE – Return on Equity

ROI – Return on Investment

R&D – Research and Development

SME – Small and Medium Enterprise

Sqm – Square meter(s)

SWOT Analysis – Strengths, Weaknesses, Opportunities, and Threats Analysis

UK – United Kingdom (United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom, the UK, or Britain)

UN – United Nations

UNDP – United Nations Development Programme

USA – United States of America

USD – Currency, Unites States of America Dollar

List of exhibits and figures

Figure 1: Consulting services offered by the incubators18

Figure 2: The United Nations System21

Figure 3: Profitability Ratios – S.C. Box S.R.L.28

Figure 4: Liquidity Ratios – S.C. Box S.R.L.29

Figure 5: Solvency Ratios – S.C. Box S.R.L.30

Introduction

An entrepreneur has a great idea, maybe has even patented a product, and maybe has already set–up a company. But the firm’s financial situation needs a boost. Bank loans, venture capital and business angel financing are difficult to obtain and are extremely burdensome on the business.

For this entrepreneur, business incubators may provide both money and a mix of expertise, experience, and connections. The incubation process has been found to speed up the firm’s professionalisation and serve as basis for securing future financing. Successful completion of a business incubation program increases the likelihood that a start–up company will stay in business for the long term.

The process of choosing a business incubator that suits your business and of getting selected to join that incubator is difficult and comprises of many steps. Many aspects of the selection process are common with the due diligence venture capitalists perform prior to investing in a business.

However, significant academic researches and papers have treated the subjects of angel and venture capital financing, whereas books of international circulation on business incubators have not recently been published. Most of the researches published on this topic date from the 1980s and the early 1990s.

I have chosen this subject because of the importance business incubators have, in my opinion, on developing the local and national business climate and on creating sustainable development.

Chapter 1. Financing Sources and Business Incubators

Financing Sources

An entrepreneur is a person with a good idea for a business, but generally with less than enough money to start a company. The step which comes next to the idea is finding the funds. Financing a seed or a start–up[1] business may prove to be extremely difficult, although there is a wide range of potential investors on both the international and national markets.

“At its most basic level, capital exists in two forms: debt and equity”[2]. Debt finance comes primarily from bank loans and...
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