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Raising Entrepreneurial Capital, 2nd Edition

Book Description

Raising Entrepreneurial Capital guides the reader through the stages of successfully financing a business. The book proceeds from a basic level of business knowledge, assuming that the reader understands simple financial statements, has selected a specific business, and knows how to write a business plan. It provides a broad summary of the subjects that people typically research, such as "How should your company position itself to attract private equity investment?" and "What steps can you take to improve your company's marketability?"

Much has changed since the book was first published, and this second edition places effects of the global recession in the context of entrepreneurship, including the debt vs. equity decision, the options available to smaller businesses, and the considerations that lead to rapid growth, including venture capital, IPOs, angels, and incubators. Unlike other books of the genre, Raising Entrepreneurial Capital includes several chapters on worldwide variations in forms and availability of pre-seed capital, incubators, and the business plans they create, with case studies from Europe, Latin America, and the Pacific Rim.



  • Combines solid theory with a practitioner's experience and insights
  • Case studies illustrate theory throughout the book
  • Updated to reflect the realities of the global economic recession

Table of Contents

  1. Cover image
  2. Title page
  3. Table of Contents
  4. Copyright
  5. Dedication
  6. Preface
  7. Acknowledgments
  8. 1. Introduction
    1. Getting Started
    2. The Typical American Business
    3. Requirements for Being Considered a Small Business
    4. Small Businesses’ Role in the U.S. Economy
    5. Understanding the Characteristics of Small Businesses
    6. Examples of Opportunities for Self-Employed Entrepreneurs
    7. The Home-Based Alternative
    8. Is Fractional Entrepreneurship the Way to Start?
    9. Characteristics of Business Owners
    10. Global Entrepreneurship
    11. Creative Sources of Capital: Bootstrapping
    12. Initial Sources of Capital
    13. Small Firms’ Typical Use of Financial Services
    14. Bootstrap Strategies
    15. Growing the Business
    16. Raising Funds Using Social Networking
    17. Perspectives on Small Business Failure
    18. Organizational Form
    19. Ownership Structure and Capitalization
    20. Organization of the Book
    21. Summary
    22. Discussion Questions
    23. Case 1.1 New Tech (A): Overview
    24. Bibliography
  9. 2. Alternatives in Venture Financing: Debt Capital
    1. Introduction
    2. Case 2.1 SPS: Financing Strategy
    3. Case 2.2 MDO Products, Inc.: Start-Up Financing
    4. Case 2.3 Cajun Yachts, Inc.: Start-Up Financing
    5. Summary
    6. Discussion Questions
    7. Case 2.4 New Tech (B): How Much Do They Need?
    8. Appendix 2.1 New Tech (C): Financial Statements
    9. Appendix 2.2 New Tech (D): Financial Ratios
    10. Appendix 2.3 New Tech (E): Key Assumptions
    11. Bibliography
  10. 3. Alternatives in Venture Financing: Early-Stage Equity Capital
    1. Introduction
    2. Case 3.1 New Tech (F): Where Will the Money Come from?
    3. Summary
    4. Discussion Questions
    5. Case 3.2 New Tech (G): Are They Worth an Investor’s Time?
    6. Case 3.3 Ecoturista
    7. Bibliography
  11. 4. Determining the Amount Needed: The Business Plan
    1. Introduction
    2. Case Study Groupon.com Financial Statements
    3. Summary
    4. Discussion Questions
    5. Case 4.1 New Tech (H)
    6. Case 4.2 Web Wired
    7. Appendix 4.1 Sample Business Plan Template
    8. Bibliography
    9. Resources
  12. 5. Valuation: Survey of Methods
    1. Introduction: Valuation Methodologies
    2. Asset-Based Valuation
    3. Market Multiples
    4. Case 5.1 (A) Woodridge Corporation
    5. Case 5.2 (B) Superior Plumbing Supply
    6. Capitalization Rates
    7. Excess Earnings Approach
    8. Case 5.3 The Fairweather Company
    9. Free Cash Flow Valuation
    10. Case 5.4 (B) Woodridge Corporation: Illustrating the Free Cash Flow Model
    11. Summary
    12. Discussion Questions
    13. Case 5.5 New Tech (I): What Is the Company Worth?
    14. Appendix 5.1 Review of Ratio Analysis
    15. Summary
    16. Bibliography
  13. 6. Venture Capital
    1. Introduction
    2. The Venture Capital Process
    3. The Term Sheet
    4. Summary
    5. Discussion Questions
    6. Case 6.1 New Tech (J): Getting Investors’ Attention
    7. Key Tasks
    8. To Do
    9. Appendix 6.1 Sample Term Sheet
    10. Capitalization of the Company
    11. Bibliography
  14. 7. Exit Strategies
    1. Importance of the Exit Strategy
    2. Valuation by Revenue Multiples
    3. Returns at Exit
    4. Likeliest Options for Exit
    5. Management Buyout
    6. Individual Buyers
    7. Going Public
    8. Initial Public Offering
    9. Alternative Methods of Going Public
    10. Summary
    11. Discussion Questions
    12. Bibliography
  15. 8. Anatomy of a Venture Funding
    1. Case 8.1 New Tech (K): Finding Compatible Investors
    2. Case 8.2 New Tech (L): Getting Ready
    3. Case 8.3 New Tech (M): Choosing an Offer
    4. Case 8.4 New Tech (N): Closing the Deal
  16. 9. Franchising
    1. Chapter Goals
    2. Case Study 9.1 Franchising the Neighborhood Restaurant
    3. Summary
    4. Discussion Questions
    5. Bibliography
    6. Additional Resources
  17. 10. Internal Financial Management
    1. Introduction
    2. Summary
    3. Discussion Questions
    4. Case 10.1 New Tech (O): Monthly Cash Budget
    5. Bibliography
  18. 11. Essentials of Risk Management
    1. Introduction
    2. Summary
    3. Discussion Questions
    4. Bibliography
    5. Additional Resources
  19. 12. Opportunities to Do Business and Raise Capital Globally
    1. The Global Mind-Set
    2. Basic Considerations
    3. A Few Words About Communications
    4. Finding and Working with International Partners
    5. Sources of Information and Assistance
    6. Testing the Market
    7. Raising Equity Capital from International Sources
    8. Valuation and Monitoring
    9. Exit Strategies
    10. Regional Considerations
    11. Summary
    12. Discussion Questions
    13. Bibliography