1. BCEN 2900 Entrepreneurship

2.  Where are you going to get it?  Choose the right source and know the pros and cons  Know the right people to get money  Plan money into your timeframe  Be creative where it counts  Know what you’re getting into

3.  Capital – what is it?  Why do we need it?  Bootstrapping versus funded ventures  Three types of capital  Fixed – building, land, equipment  Working – current assets minus current liabilities  Growth – excess stores of capital to fund expansion  Why do we need to know these?

4.  Equity –  The personal investment of an owner in a business  Can all be lost  Entrepreneur gives control to other owners  Debt  Financing that is borrowed and must be repaid  Includes an interest component  No dilution of ownership and control

5.  Personal savings  Entrepreneurs should expect to contribute 20-50% of their start-up funds  Friends and family  Angel investors Angel investors  Partners  Venture capital companies  Initial public offering

6.  Dana White, UFCUFC  Bought old UFC as a tattered brand for $2 million with help from a childhood friend.  Poured money and hype into the brand to make it a brand that grosses $200 million today, 7 years later.  Has gone from 3000 tickets sold to 21,000 per event.  Has fueled a nationwide affinity for MMA

7.  Again, you do have to repay loans, with interest.  Loans can come from:  Banks, suppliers, finance companies, brokerages, insurers, credit unions, credit cards, bonds, and other lending companies Bankscredit cards,  Banks:  May turn you down because you have no collateral, no cash flow plan, or you haven’t provided them with convincing information

8.  A tricky proposition – relationships can be damaged!  Know how the loan or investment is impacting everyone – don’t strap anyone!  Get it in writing  Have a realistic repayment or cash-out plan.

9.  Lisa D’Aquanni, owner of The Chocolate Gecko, has been able to slowly grow her home-based business by raising funds in creative ways like selling gift certificates and bartering. She now needs to purchase and renovate a building.The Chocolate Gecko  John Acosta, owner of Jolly Technologies, faces the same challenge, as he attempts to raise $100,000 to modify the production and enhance marketing efforts for his garage-door opening device.  What are the advantages and disadvantages of equity and debt for both of these folks?  Would the following funding sources be appropriate for both – friends and family, angels, IPO, bank loan?  What do they need to do before approaching a funding source?

10.  EDA and HUD loans  Up to $10 million (EDA); $5 million (HUD)  For EDA loan, owner must supply 15% of loan amount in capital  Community development block grants  USDA Rural Business-Cooperative Service  Tries to improve economies of rural areas  Great for Internet based companies without need for city ties

11.  SBIR  Small Business Innovation Research  Cash grants!  12% of applicants funded  $100,000 to $750,000  STTR  Grants up to $500,000 for university/nonprofit institutions who partner with private organizations

12.  Largest financial backer of small businesses in the U.S.  Up to $750,000 loans  Low Doc Loans for up to $150,000  7(a) loan  For startups  10 to 25 year loans for working capital, equipment, and buildings

13.  504 loans  Group of loans, plus 10% equity from owner  For expansion through purchase of equipment and buildings  Through certified development centers (CDCs)  Microloans  Up to $35,000 for startup for small businesses and nonprofit childcare centers  Through intermediary centers