FIN 571 UOPX Wk 6 Ways of Funding a Startup Business Discussion Responses

Description

 Respond to the following 
Describe what approach you would recommend for the client by using the information you researched.
How does your approach differ from the recommendations of your classmates?
How might your recommendation change after reading your classmates recommendations?
respond to each students with 175 words or more

Tiare Kepa
4/16/20, 11:41 PM 
NEW
This week’s assignment is to discuss the advantages and disadvantages of using venture capital as startup funding for a business. According to the reading, “equity capital in young businesses is known as capital venture, which is provided by specialist venture capital firms, wealthy individuals, investment institutions such as pension funds, and sometimes mature corporations on the hunt for new technology or new products” (Brealey, Meyers, & Marcus, 2020, p.442). Venture capital is normally used with companies that have long term growth potential, for the smaller companies in the market. Some disadvantages with sourcing venture capital is that investors will have equity or shares within the company. That means that these new investors will also have a say in how the company is run. Some advantages of sourcing venture capital because those investors are normally well connected within the market and have successful networks. Another advantage of sourcing venture capital is that you are not obligated to pay back the investors for the start-up money, that is the risk they take.

Kimberly Hernandez
4/16/20, 11:23 PM 
NEW
Venture Capital is when well off companies or individuals invest in a company in order for them to financially succeed. These “sponsors” invest in starter companies who need a large amount of money. They first evaluate and ask for financial records. If they decide to move forward, the exchange for the money includes a part of the company’s equity. Which also means they have the authority to make some company decisions.
As a business consultant, I would recommend this option for a bigger company, however not for a bakery. I would recommend we start with a financial and contingency plan. It is important to know how much the bakery will be spending, the amount they are expecting in return, and to plan accordingly incase things don’t go as planned. We would create a planning model to show how any changes can affect capital, assets, and finance. Like “Dynamic’s short-term financial plan,” chapter 19.4, the bakery might want to ask for a loan with a low interest rate and also stretch payable to not pay in the first quarter- this to protect cash flow.
Brealey, R., Myers, S. C., Marcus, A. J. (2020). Fundamentals of corporate finance (10th ed). McGraw-Hill Education: New York, NY.

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Bakery

financial and contingency plan

shortterm financial plan

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