Business Administration & Management Mr. Bernstein Methods of Obtaining Capital, pp 431-444 May 2017

Business Administration & Management Mr. Bernstein Equity Capital Selling slices of ownership Equity investors are entitled to share of profits May or may not have decision-making rights Bring in Partners or sell shares of stock Preferred Stock Retained Earnings

Business Administration & Management Mr. Bernstein Debt Capital Borrow money and pay interest on outstanding balances Short-term Capital Line of Credit Secured Loans are backed by collateral Unsecured loans have lower status in the case of bankruptcy and liquidation Convertible Bonds Leases

Business Administration & Management Mr. Bernstein Factors to Consider Upfront Fees Interest Rates Liens or Encumbrances Giving up portion of control Giving up a portion of future profits Effect on the strength of the Balance Sheet and effect on future borrowing needs

Business Administration & Management Mr. Bernstein Sources of Capital Banks Investment Banks Venture Capital (primarily for Startups) Crowdfunding (primarily for small businesses and Startups)