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Invention to Venture Section 7 Finding the Money Different Forms of Financing or Not All $ is Created Equal plus The Reality Show: A Panel Discussion © 2005 NCIIA and Grayhead Associates All Rights Reserved
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Invention to Venture Different Forms of Capital Not all $ is the same! Personal debt Equity Grants Debt Customer advances Licenses Cash flow
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Invention to Venture Personal debt Max out credit cards Take a 2nd mortgage Borrow from whomever they can Loan their own savings to the company Most founder start ventures using their own money. They may:
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Invention to Venture Equity An ownership position in the new venture, exchanged for money or services from: You Friends, Family and Fools (FF&F) Angels Venture capitalists (VCs) Strategic partners The public, through an IPO
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Invention to Venture Grants Government grant programs –SBIR –STTR Private grants –Business Plan competitions –Foundations (e.g., NCIIA) State/local grants and resources No interest charged, no need to pay back, and no equity given up
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Invention to Venture Debt A promise to repay funds along with a fixed or variable rate of interest Commercial banks Guarantee programs Massachusetts agencies Subordinated / mezzanine instruments Accounts receivable financing Purchase order financing
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Invention to Venture Customer advances An often overlooked source of capital provided by customers who want your product or service badly. Can be up-front or milestone payments.
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Invention to Venture Licenses Do not: –have to be repaid –require interest payments –require giving up equity Do require giving up some rights to the use of your technology
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Invention to Venture Cash Flow Real revenues and profits are attractive to investors, bankers, and just about everyone else you can think of.
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