Case Study 2
1.Experts say that entrepreneurs who need between $100,000 and $3 million often face the greatest obstacles when raising capital for their businesses. Why? I think the reason it is hard for entrepreneurs to raise capitals between $100,000 and $3million is because that is a large sum of money with only a certain amount that can be given to small businesses. There is a high demand for businesses that need capital, is now greater than ever.
2. How should Kevin Semcken raise the $1.5 million in capital that Able Planet needs? Be sure to consider sources of both debt and equity financing. Well since Semcken already has his company up and running, I think the best way to raise money is to raise Venture Capital. Venuture Capitalist mostly raises money for existing companies that are looking to expand and grow. Venture Capitalist usually shy away from investing small amounts of capital into business and prefer investing $500,000 to millions into businesses.
3. Write a short memo to Kevin Semcken explaining what he should do before he approaches potential lenders and investors to maximize his chances of getting the capital that Able Planet needs.
Dear Kevin Semcken,
Before you approach potential lenders and investors, I think you should gain some sort of line of credit. Lenders and investors want to know if you can manage your money and pay your debt. I think you should also write a detailed business plan. A business plan is an outline for your business and it’s operations, finance and pros and cons of the market and the product. Lenders want to know the ins and outs of the product/service and the profitability of it. And lastly, do your homework on your backers. Find out if you would need a bank loan, Venture Capitalist or Angel Investors for the needs of funding your business.