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Determine Funding Needs Stephen Lawrence and Frank Moyes Graduate School of Business University of Colorado Boulder CO 80309 0419 Course Outline Course Outline This Week How much money do we need Review cash flow statements Find periods with negative cash balances Schedule cash infusion s to eliminate negative balances Add safety cushion 10 25 Develop funding strategy E g staged funding tranches Sources of Funds Equity funding Debt Non traditional Equity Funding Private Placement Friends family and fools Well to do investors Angels Professional investors working alone Colorado Capital Alliance www anglecapital com Venture Capitalists Most expensive form of financing Advantages and disadvantages VC s Ideal of an Entrepreneur Qualified in hot area Technically feasible and likely Compelling story presentable Recognizes need for speed to IPO Good reputation references Understands need for team Diligent but flexible Gets along with investors Understands and accepts VC deals Is sought after by many VC s Realistic expectations Debt Credit cards Bank loans Typically want to make secured loans Second mortgage on house or property Can use equipment facilities to secure loan Revolving lines of credit Investment banks Less expensive than equity Advantages and disadvantages Nontraditional Funding Sources Customers Development Prepay Co invest Vendors Leasing Factor receivables Other sources Advantages disadvantages Financial Plan Statements appendices Monthly Income 1 yr Monthly Cash Flow 1 yr Annual Income 5 yrs Annual Balance Sheet 5 yrs Annual Cash Flow 5 yrs Written Financial Plan Introduction Financial Summary Financial Assumptions Funding Requirements Sources Uses of Funds Business Risks Ratio Analysis Compare to your industry Financial ratios Profitability Returns Understand differences Adjust financials as necessary

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