Determine Funding NeedsCourse OutlineCourse Outline – This WeekHow much money do we need?Sources of FundsEquity FundingVC’s Ideal of an EntrepreneurDebtNontraditional Funding SourcesFinancial PlanRatio AnalysisDetermine Funding NeedsStephen Lawrence and Frank MoyesGraduate School of BusinessUniversity of ColoradoBoulder, CO 80309-0419Course OutlineCourse Outline – This WeekHow much money do we need?Review cash flow statementsFind periods with negative cash balancesSchedule cash infusion(s) to eliminate negative balancesAdd safety cushion (~10-25%)Develop funding strategyE.g., staged funding “tranches”Sources of FundsEquity fundingDebtNon-traditionalEquity FundingPrivate PlacementFriends, family, and foolsWell to-do investorsAngels“Professional” investors working aloneColorado Capital Alliance (www.anglecapital.com)Venture CapitalistsMost “expensive” form of financingAdvantages and disadvantagesVC’s Ideal of an EntrepreneurQualified in “hot” areaTechnically feasible and likelyCompelling story, presentableRecognizes need for speed to IPOGood reputation, referencesUnderstands need for teamDiligent, but flexibleGets along with investorsUnderstands and accepts VC dealsIs sought after by many VC’sRealistic expectationsDebtCredit cardsBank loansTypically want to make secured loansSecond mortgage on house or propertyCan use equipment & facilities to secure loanRevolving lines of creditInvestment banksLess “expensive” than equityAdvantages and disadvantagesNontraditional Funding SourcesCustomersDevelopmentPrepayCo-investVendorsLeasingFactor receivables Other sourcesAdvantages & disadvantagesFinancial PlanStatements (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 PlanIntroductionFinancial SummaryFinancial AssumptionsFunding RequirementsSources & Uses of FundsBusiness RisksRatio AnalysisCompare to your industryFinancial ratiosProfitabilityReturnsUnderstand differencesAdjust financials as