Fi512 Entrepreneurial Finance

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  • Topic: Venture capital, Corporate finance, Private equity
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  • Published : November 10, 2012
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Week 1 Assignment

Chapter 1: Exercises/Problem #1 pp.33-34

1.
[Financing Concepts] The following ventures are at different stages in their life cycles. Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

A. Phil Young, founder of Pedal Pushers, has an idea for a pedal replacement for children’s bicycles. The Pedal Pusher will replace existing bicycle pedals with an easy-release stirrup to help smaller children hold their feet on the pedals. The Pedal Pusher will also glow in the dark and will provide a musical sound as the bicycle is pedaled. Phil is seeking some financial help in developing working prototypes.

This is a company in the development stage. The founder, Phil Young, has a concept that he wants to try to develop and market. He is looking for financial assistance to develop his prototype. At this point of his business venture, he may need to ask family and/or friends for loans and/or possible liquidate some of his own assets to help pay for his project.

B. Petal Providers is a firm that is trying to model the U.S. floral industry after its European counterparts. European flower markets tend to have larger selections at lower prices. Revenues started at $1 million last year when the first “mega” Petal Providers floral outlet was opened. Revenues are expected to be $3 million this year and $15 million next year after two additional stores are opened.

Petal Providers is a firm that looks like it is entering the rapid growth stage. The company expects to increase revenues from $1million to $15million in 3 years after 2 additional stores open. Financing would be external, probably from second round financing. These finances would probably bee from business operations, suppliers, commercial banks, and investment bankers.

Chapter 2: Exercises/Problem #2 A-C & E p.70
2. [Financial Ratios and Performance]...
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