1. Business Administration & Management
Mr. Bernstein
Methods of Obtaining Capital, pp
May 2017

2. 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

3. 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

4. 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

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