Financing Entrepreneurship
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Financing Entrepreneurship

What is Entrepreneurial Finance?

In any form of entrepreneurship, cash is needed to fuel growth, the world of entrepreneurial finance is about where that cash has come from and what it is used for.

Watch this first as the basis for all of entrepreneurial finance

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Different types of Entrepreneurial Finance

Cash and Risk are the root of all of entrepreneurial finance, understanding this is critical to everything else

Bootstrapping

Bootstrapping is when a businesses cash for growth comes from it's earnt profit. It is also common for bootstrapped businesses to raise small amounts of capital from other sources at the start but this is not a bootstrapped businesses finance strategy. Their strategy is to grow as fast or as slow as their cash (profit) will allow.

Angel Investment

Angel investors are high net worth individuals who make investment decisions with their own money

For those who are interested click here for even more information about this topic

Venture Capital

Venture Capital (VC) refers to an organisation that has been set up for the purpose of investing money. A limited partner (LP), is the entity or person who gives a VC money to invest on their behalf and then a general partner (GP) is the person who manages the VC fund and decides who to invest in.

For those who are interested click here for even more information about this topic

Equity Crowdfunding

Equity crowdfunding is when you raise finance via smaller contributions from many people. It is a recent addition to the Australian eco-system and is still being developed but has potential to play a large role.

For those who are interested click here for even more information about this topic

One of the leading equity crowdfunding platforms in Australia was founded by USYD Alumni

Lots of good information about equity crowdfunding here

Some tips on equity crowdfunding

  • Make sure that crowdfunding is the best way to raise money, could it be easier and cheaper to raise it straight from family and friends?
  • Don't underestimate the costs (video production, COGS, advertising, commission, etc)
  • Small crowdfunding campaigns are almost entirely funded by friends and family (75%)
  • Crowdfunding generally only works for B2C companies

Important Calculations in Entrepreneurial Finance

Fixed and variable costs

Watch this to understand fixed and variable costs

Contribution and breakeven margin

If you understand fixed and variable costs, watch this to understand contribution and breakeven

Cost to acquire and lifetime value

Watch this to understand cost to acquire and lifetime value

For those who are interested even more information about this topic is here
This is a great playlist of videos covering income statements, cash flows, budgets, capitalisation table and forecasting.
For those who want to go and build out cap table scenarios and simulations