Explain and contrast in detail the difference in forecasting financial needs for a seasoned idea start-up and a new idea start-up.
The monetary needs for any start up is cash. Cash may originate from the entrepreneur, financial specialists, loans, family or even friends, regardless it is vital. A seasoned idea start-up which means they’ve taken a great deal of time doing the strategy for success and conversed with many individuals and banks, and so on. A new idea start-up would attempt to discover those individuals to talk with them regarding loans and where to procure the cash. In the case of any start-up you should need to be able to take a look at the sustainable growth model and cash flow breakeven analysis and after which you can move on to something that would grow in complexity as the business grows.
Also, there is the cash flow break-even analysis which assists in determining the level of sales that a venture must be able to achieve in order to finance their operations from the cash flow. Once you are able to effectively combine the cash flow breakeven analysis with forecast of the sales then it can be estimated how much of an investment needs to be made to keep the business running until the breakeven point is reached. Scenario analysis is another procedure which examines the impacts of vulnerability/uncertainty. Instability will be rather high with a new idea start-up and much likely lesser with a seasoned idea start-up.
At the point when the situation investigation is connected the goal is to pick up an understanding of how money related needs change over a scope of rational situations. This assists with the comprehension of money related needs.

Timing and planning are critical to the financing needs of all ventures. Explain in detail what types of external forces could alter a financing strategy.

Economy: The worldwide economy is something that will eventually influence any business and it could significantly influence financing systems. The business sector fluctuates in view of governmental issues, wars, terrorism and currency fluctuations.
Climate: Big storms, tornadoes, hurricanes, and so forth could influence your determined deals and totally flop the financing procedure that was set up. Capacity to have your business open amid these could likewise have a stream-down impact on different companies.
Infrastructure: A business that depends on range for accomplishment could have an issue with this with not considering zoning laws, development, lodging improvement, and many other factors. Likewise changes in infrastructure could influence it also.
Potential Customer Base: trends as well as the customer base may change. It may change suddenly or over a period of time.
Laws and regulations: A change in Federal, State or Local laws could possibly have a direct impact on the business.
Money: This a general class however I would put things like financing costs, the accessibility of credit and consumer loans that cannot be controlled frequently. They could influence your capacity to start-up or continue working together.

Name and discuss several valuation methods that are employed in the valuation of new ventures. Compare and contrast the strengths and weaknesses of each.

Discounted Cash Flow Method: A strategy that is utilizes to appraise the engaging quality of a venture opportunity. It exploits future free income projections and rebates them to conclude at a present quality which is utilized to assess the potential for speculation. In the event that the worth arrived is higher than the present expense of the speculation, the open door may be a good one. The Relative Value Method: this system considers the estimation of comparable resources. It just takes a look at a benefits inherent esteem and does not contrast it with different resources.
The First Chicago Method and Venture Capital Method: In the first place, Chicago strategy is essentially a change on the venture capital system. It considers payouts to the holder of particular interests in an organization through the holding period under different situations. It is utilized especially as a part of the valuation of development organizations which frequently don’t have chronicled money related results that can be utilized to think about. Since it increases genuine budgetary results against a practically identical valuation different it gives a worth too low given the possibilities of the business.

What are the key elements in building and executing a business plan? Presume that you will be using the business plan for establishing valuation from financing sources.

There are essentially eight key elements that go into the formation of a business plan.
1.) Executive Summary: The summary should be able to successfully tell the reader/investor what the plan and business is all about and what exactly you are asking for.
2.) Market Analysis: This part should be able to illustrate your knowledge about the particular industry your business is operating within.
3.) Company Description: This section should include a more in depth look of how all the different elements of the business work together. It should include information about the nature of the business as well as the crucial factors that you believe will make your business a success.
4.) Organization and management: Include the organizational structure of the company, details regarding the ownership of your company, descriptions of your management team and the qualifications of your board of directors.
5.) Marketing and sales strategies: Define your current marketing strategies effectively. Start with the strategies, maneuvers and channels that you have used to create your greatest success. 6.) Service and or product line: Description of your service and product line. Make sure to lay emphasis on the benefits. Establish its exclusivity and elaborate on it. Show why the product is not only different but much better than the others out in the market.
7.) Funding requirements: State the amount of funding that would be required for you to start or grow your business. Include the best and worst case scenarios and be completely realistic.
8.) Financials: Develop the financials after you have analyzed the market in depth and set a clear objective. It should also include at least three to five years’ worth of past data.

Name and describe in detail at least 5 sources of external financing. How do these sources assist in establishing the Cost of Capital for a venture?
External financing is financing through sources that are found outside of the business.
Examples of these might be from creditors or banks, tackling new business accomplices or issuing value or bonds to make long haul commitment or business paper to tackle shorter term obligations. You can do them in the form of ordinary shares which companies use to raise capital by selling stock in their business. This entitles the buyer to be able to voice his/her individual opinions in the decisions made by the firm. Preferential shareholders receive dividends before the individuals with ordinary shares. There are lower risks and lower levels of return which in turn mean that the preference shares have a less volatile market price. Bank overdraft is where the businesses can access funds by maintaining a negative balance on their bank accounts. There are certain advantages of using an overdraft which can include flexibility, competitive interest rates and can prove to be a long term source of finance. Sale and lease back is where usually businesses can raise funds by leasing out their unused assets to a financial institution in order to raise some required funds. Rights Issue is an option where in order to raise funds without diluting absolute control of the business, the rights issue offers new shares to its existing shareholders. Shares issued in this way end up generating goodwill and help in maintaining the predictability of shareholder governance.

Name the key characteristics that VC investors look for in an entrepreneur. Name similar characteristics that entrepreneurs look for in choosing a VC partner.

They look for a trainable and passionate management team
Mutually beneficial relationship
Realistic business plans with correspondingly realistic expectations
Ability to problem solve and scalability
Entrepreneurs also look for similarity of the types of aspects. They want for a VC partner to be able to coach them, guide them and be passionate about their idea. They should be willing to give them genuine feedback and criticize them for the same. They also want them to care about their start up idea and want to assist their business. It’s a mutually beneficial relationship for both.

Name several ways the Venture Capitalists can “sweeten” an investment for the entrepreneur while maintaining control of the investment as it matures.

I would choose to think that a silent investor may prove to be best in this given scenario where fundamentally an investor provides monetary assistance and keeps to themselves without interfering and permitting me to retain my profits. A few investors believed that they wouldn’t have any thought of how to maintain the business/organization. They leave the administration of the organization up to the proprietor who is the master in it and all they request that is audit the profit and loss statement quarterly. A VC can tell the entrepreneur that they will keep up aggregate control of the business and the rate of return sufficiently low so that the entrepreneur still makes a profit.

Extra Credit Question:

What is the simplest definition of cash flow?
The simplest definition of cash flow is -:
EBITDA- earnings minus debts (earnings before interest, tax and amortization)