Acquiring Financial Resources Technology Entrepreneurship Class GIMPA April 2007

Fine tuning Before we get into the nitty-gritty of this presentation, let’s do a bit of fine-tuning to make sure the message comes out right…

Where to Source Financial Resources Financial Resources (money) go wherever desirable products and services are found Soft money: family & friends, angel investors; hard money: banks, credit unions, venture capitalists Expensive money: high interest debt; “cheap” money: long term equity

Real Money Needs Real Structures A worthy vessel is needed for a worthy cause The scheduling of repayment of investments and reporting of profits may require specific management skill; this will be demonstrated through complex projections Corporate governance structures give investors some confidence that their money will be put to good use and that their returns will be managed and delivered

Track Record For the new business, the track record of the promoters is a key factor in attracting funding for the venture For a going concern, the existing business track record helps demonstrate potential [to investors] Demonstration of market insight (with figures) may help compensate where specific track record is absent

Personal Investment Most investors want to know how much the promoters have put into the venture The smaller your personal investment, the smaller the share you retain after others invest Structure “friendly” investments as part of your personal investment

Strong Branding When a financier/financial institution recognizes your brand, they’re more comfortable promoting your request Brand recognition gets you attention when you go out cold calling for an opportunity to make a presentation

Financial Reporting Income Statement: net income Cash Flow Projection: net cash Balance Sheet Projection: net worth 1 year, 2 years, 5 years Unlike what you’d imagine, you need these reports even more than your potential investors do

What Do Financial Reports Demonstrate? Fundamental understanding of your business How long it will take to break even What your profit margins are likely to be How much money you need (and when you’ll need it)

Summary Determine the structures required to support your business Have detailed financial models in your business plan that describe how your business will perform Strive to aggregate a significant personal investment

Q & A