Start-up Financing at TU München

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Study with flashcards and summaries for the course Start-up Financing at the TU München

Exemplary flashcards for Start-up Financing at the TU München on StudySmarter:

What are the carrying risks of equity of an on going business?

Exemplary flashcards for Start-up Financing at the TU München on StudySmarter:

What are the characteristics of a founder as a capital provider?

Exemplary flashcards for Start-up Financing at the TU München on StudySmarter:

Explain the characteristics of equity

Exemplary flashcards for Start-up Financing at the TU München on StudySmarter:

Explain incorporation

Exemplary flashcards for Start-up Financing at the TU München on StudySmarter:

What are the carrying risks of equity of a bankrupt business?

Exemplary flashcards for Start-up Financing at the TU München on StudySmarter:

Which group of people belongs mostly to informal investors?

Exemplary flashcards for Start-up Financing at the TU München on StudySmarter:

How can one avoid hampering growth by sticking to the principles of success in the early stages?

Exemplary flashcards for Start-up Financing at the TU München on StudySmarter:

Which two approaches are there when it comes to financing a young company?

Exemplary flashcards for Start-up Financing at the TU München on StudySmarter:

What is the definition of bootstrapping?

Exemplary flashcards for Start-up Financing at the TU München on StudySmarter:

What is the disadvantage of external investors?

Exemplary flashcards for Start-up Financing at the TU München on StudySmarter:

What are the 7 principles behind bootstrapping?

Exemplary flashcards for Start-up Financing at the TU München on StudySmarter:

Define an incubator

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Exemplary flashcards for Start-up Financing at the TU München on StudySmarter:

Start-up Financing

What are the carrying risks of equity of an on going business?

 The more equity available, the less risk debtholder are taking, since their claims have a higher seniority.
 Reduced debt financing costs.

Start-up Financing

What are the characteristics of a founder as a capital provider?

-Beginning: invest with max. private wealth

   -limited availability of other funding resources

   -aim max share of own company

-Positive signalling to additional capital providor

-Problem: “personal net worth tied up in the same business that provides all their income.”

Start-up Financing

Explain the characteristics of equity

no limited time horizon

no pre-defined return obligations

no repayment obligations

Start-up Financing

Explain incorporation

-Legally: initial contributions (shareholder’s equity ) has to be made –>effecitive incorporation

-economically: equity capital is needed to enable further financing (especially debt financing )

Start-up Financing

What are the carrying risks of equity of a bankrupt business?

 Debt liabilities get served first in case of bankruptcy and subsequent liquidation.
 The more equity available, the less risk debt provider have to bear because equity acts as default cushion.

Start-up Financing

Which group of people belongs mostly to informal investors?

friends and family (50% of informal are relatives)

less than 10% unknown

–>personal relationship making up for information asymmetry

Start-up Financing

How can one avoid hampering growth by sticking to the principles of success in the early stages?

-leave nice–>compete against larger players

-standardize products and services

-build dedicated team for central functions (controlling,accounting…)

-rebalance focus from cash to strategic goals

-hire more expensive talent–>not afraid of hiring employees that have started the venture with you

Start-up Financing

Which two approaches are there when it comes to financing a young company?

big money

low budget

Start-up Financing

What is the definition of bootstrapping?

„Finding creative ways to avoid the need for external financing by reducing overall cost of operation, improving cash flow, or using financial sources internal to the company.“
(Ebben/Johnson, 2006)

Start-up Financing

What is the disadvantage of external investors?

-disciplining effect of having no money–>more money is not the solution for many problems

losing control

-failure–>timely reaction by external investor

    -initial business case incorrect or weak execution?

    -interpret failure as bad decision making or overly optimistic assumption of founders

-have to justify decision–>psychological pressure

Start-up Financing

What are the 7 principles behind bootstrapping?

1. Get operational quickly

2. Look out for quick break-even, cash-generating projects

3. Offer high-value products or services sustaining direct personal selling

4. Forget about the crack Team

5. Keep growth in check

6. Focus on Cash, not on profits, market share, or anything else

7. Cultivate banks before the business becomes creditworthy

Start-up Financing

Define an incubator

An incubator is a service center that strives to support ventures in the earliest stages of their existence

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Essenz Wirtschaftsethik

Einführung in die Softwaretechnik

Investitions- und Finanzmanagement

Datenbanken

StaatsR I - haupties

Wirtschaftsprivatrecht 1

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Awards

Best EdTech Startup in Europe

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EUROPEAN YOUTH AWARD IN SMART LEARNING

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BEST EDTECH STARTUP IN GERMANY

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Best EdTech Startup in Europe

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Awards

EUROPEAN YOUTH AWARD IN SMART LEARNING

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Awards

BEST EDTECH STARTUP IN GERMANY

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