...Kurtz (HBS 1992). Other reports from the VSS Project include cases, teaching notes and monographs. This report was prepared by Lucinda Linde (Marlin Capital) and Alok Prasad (Pittiglio, Rabin, Todd & McGrath) under the direction of Kenneth P. Morse and Matthew Utterback of the MIT Sloan School and Howard Stevenson and Michael Roberts, of the Harvard Business School. �2000 MIT Entrepreneurship Center Executive Summary Angel investors are an important and growing source of financing for the start-up and initial growth phases of technology ventures. This study focused on high net worth angel investors with entrepreneurial backgrounds. Many of these angels invest in first time entrepreneurs before the entrepreneurs secure venture capital financing. Besides earning a strong return on their investment, these experienced angels are motivated to “give back” to the community which helped make them successful. Very little published data is available on angel investing and little research has been done on the experienced angel investor. It may be valuable for first time entrepreneurs, venture capitalists, regulators and other members of the venture community to understand, leverage and support this growing class of experienced angel investors. This study introduces and defines the experienced angel investor, outlines the angel investing process, discusses the rise of organized angel groups, and provides advice for high net worth individuals aspiring to become angel investors. The intended...
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...Investment Banking and Venture Capital Assignment No:-2 Regulation of Venture Capital By SEBI - What is Venture Capital? Venture Capital financing is a process whereby funds are pooled in for a period of around 10 years and investing it in venture capital undertakings for a period of 3 to 5 years with an expectation of high returns. To protect the funds of the investors against the risk of losses, venture capital fund provides its expertise, undertake advisory function. Venture Capital financing had been a popular source of funding in many countries and served as a lucrative bait to create a similar industry in India as well. Regulations of Venture Capital: VCF are regulated by the SEBI (Venture Capital Fund) Regulations, 1996. The regulation clearly states that any company or trust proposing to carry on activity of a VCF shall get a grant of certificate from SEBI. Section 12 (1B) of the SEBI Act also makes it mandatory for every domestic VCF to obtain certificate of registration from SEBI in accordance with the regulations. Hence there is no way that an Indian Venture Capital Fund can exist outside SEBI Regulations. However registration of Foreign Venture Capital Investors (FVCI) is not mandatory under the FVCI regulations. A VCF and registered FVCI enjoy several benefits: • No prior approval required from the Foreign Investment Promotion Board (FIPB) for making investments into Indian Venture Capital Undertakings (VCUs). • As...
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...commingled real estate funds and co-investment vehicles that sit alongside those funds. e vehicles must give the GP discretion over the capital, meaning club funds, separate accounts and joint ventures are excluded from the ranking. Also excluded are funds with strategies other than value-added and opportunistic, such as core and core-plus, as well as those not focused on direct real estate, like fund of funds and debt funds, and funds where the primary strategy is not real estatefocused, such as general private equity. Change is in the air Consolidation, business exits and strategic shifts among general partners begin to manifest themselves in the 2011 ranking While the full e ect may not be completely evident yet, the main theme reverberating through this year’s PERE 30 ranking is change. Many of the rms that comprise the list are going through a transformation, whether it is acquiring competitors to achieve greater scale or gain access to a region, scaling back operations or exiting the business completely in the wake of the recent downturn and expected reforms or just adjusting strategy to take a new approach to investing and fundraising. Some of these changes already have a ected the standings, while others will take another year or two to have a noticeable impact. Among the top three rms – e Blackstone Group, Morgan Stanley Real Estate Investing and Tishman Speyer – each has maintained its standing in the ranking, although fundraising totals for all three have declined by...
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...is known as Bonds. Bonds are referred to as debt securities or debt instruments issued by a corporation or a government to raise money from the public. Its basic provisions generally entail a series of contractual interest payments, at a particular (fixed or variable) rate of interest (coupon) based on a stated par (face value) of the bond. As investing in bonds is considered less risky, people tend to invest with the objective of earning higher returns on their investments. Bonds can be traditional, zero coupon, typical or perpetual. Traditional bonds are purchased at face value, they pay face value at maturity and they pay regular interest. Zero coupon bonds pay no interest over their life. These bonds are purchased at a discount and pays face value at maturity. A typical bond purchased today is a price other than $100, matures at 100, pays regular interest and the return is interest plus change in principal. Perpetual bonds have an invested principal and the interest is paid to perpetuity. This paper examines and supports bonds as a method of finance. It goes further to outline the pros and cons of entities investing in bonds as well as provides an analysis of the potential...
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...come up with the best advice I could give with regards to raising capital for the business. The main sources for raising capital are through debt and equity. “Debt financing means borrowing money from an outside source with the promise of paying back the borrowed amount, plus the agreed-upon interest, at a later date.” (Palermo, 2014) One of the advantages of debt financing is that the lender does not receive on ownership share to the business because after the debt is paid, there are no more obligations to the lender. Therefore it preserves ownership. Debt financing can be done for small or large businesses and it comes through loans from commercial banks or through organizations like the SBA (Small Business Administration) loan programs. There are disadvantages to this type of financing especially for the businesses that don’t do well and still has the obligation to pay the loan. Instead of all the profits going back into the business, part of it will have to be used to repay the loan. It does not matter if the company is doing well or not, the debt will still have to be repaid monthly or whenever it is due. “Carrying too much debt is a problem because it increases the perceived risk associated with businesses, making them unattractive to investors and thus reducing their ability to raise additional capital in the future.” (Hillstrom, n.d.) Equity is another option my client can take when it comes to raising capital. Equity financing involves the sale of ownership interest...
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...reasoning. Economic development is not achievable without an improved rate of capital formation. One important way of capital formation for developing economies is through improving their investment banking industries. Investment banking is the process of raising capital for businesses through public floatation and private placement of securities. Investment banks work with companies, governments, institutional investors and wealthy individuals to raise capital and provide investment advice. Originally, investment banking meant the underwriting and distribution of securities. Today investment bankers also invest a lot of effort into helping companies design deals and the securities to finance them, and then use their brokerage arms to sell the securities to the investing public, both retail and institutional. The investment banking industry is central to the market-based economy. By bringing together entities in search of new capital and investors, usually institutional investors, the investment banking industry play an important intermediation function in all market economies. Just like most developing countries, investment banking in Ghana is a relatively new phenomenon. However, if the experience of other counties is indicative of what is likely to happen, then it is likely that in the future, companies will increasingly migrate from bank finance to capital market financing for their long term capital needs. The Ghana Stock Exchange (GSE) for instance started with 3 Licensed...
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...rank so highly in this list have exited and been replaced by groups that have had the time to raise at least two significant funds since 2010 as the shakedown by investors has left the healthy apples on the trees, while the sickly have fallen. Of course, there has been no change at the very top of the chart. The Blackstone Group is out of sight having now raised more equity for opportunistic real estate investing than the GDP of 77 different countries. The only slight drama towards the top of the tree relates to second and third spot where Starwood Capital Group this year leapfrogged Lone Star Funds, having figured behind the Dallas-based firm the previous year. Starwood’s second position on the grid has a lot to do with raising its largest ever fund - Fund X. A counterintuitive finding, however, comes in the absolute dearth of true European private equity shops in the PERE 50. How can this be when Europe has been the hottest market for investing? This year, there is no Orion Capital Managers, no Tristan Capital, no Perella Weinberg Partners or Patron Capital. Instead, what we have is Hamburg-based shopping center specialist ECE Real Estate Partners...
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...Multinational companies in the west were investing in this market, building their R&D in developing countries, and hoping that economical and educational growth in the emerging market would help them overcome challenges. Businesses also realized that distributing to the billions of middle class people in developing nations is as beneficial as investing in the western upper class population. There was marketing potential in this region of the world, since the population of intellectuals was growing fast and consumers were getting richer and richer every day. The emerging market improved the design of the products by being smart in innovating the production process. The majority of people in China and India were happy with the new economic situation, since they were now able to use their resources, such as raw materials, in the best way possible to improve the economic situation. However, risk and unpredictability is a huge factor when entering this market. Obstacles include, but are not limited to, pollution, government intervention, laws, regulations, piracy and poverty. Dani Rodrik argues that most nations that benefited from “miracle growth” moved their production process to organized manufacturing, which resulted in rapid industrialization. This transformation enabled poor countries to replicate technologies, and move farmers to manufacturing segments, allowing them to be a part of the labor force. This movement resulted in lowering unemployment, raising income and ultimately rapid...
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...Debt vs. Equity Financing ACC 400 May 1st, 2012 Debt vs. Equity financing Many businesses find it necessary to expand. The question is how? Business owners look to the advantages of debt compared to equity. These two categories are the main sources of capital for businesses, which there is nothing more important than raising capital. Finding the right balance between debt and equity financing means weighing the benefits of each and involves accounting, investing, banking and sometimes even some legal assistance. Debt Financing Debt financing is defined as taking on a form of loan/loans that must be repaid over time, often times with interest. In order to use debt financing as an option, businesses can choose to borrow from government agencies or banks for short term; which is usually under a year or long term loan over 12 months. Debt financing has it’s benefits to business owners during tax season because the interest paid on loans is deductible. However, the disadvantage is obviously the risk involved with taking out a loan in general, because there is a burden of that debt and failure to repay that debt with irregular cash flow available. For example: Being a student in college I had to choose if I wanted to invest in my future and how financially I was going to pay my way through school. So I chose to take out loans and pay the interest and loan off while in school, I not only took a risk but I did it to expand and grow. Second example...
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...GLOBAL PRIVATE EQUITY REPORT 2013 About Bain & Company’s Private Equity business Bain & Company is the leading consulting partner to the private equity (PE) industry and its stakeholders. Private equity consulting at Bain has grown 13-fold over the past 15 years and now represents about one-quarter of the firm’s global business. We maintain a global network of more than 400 experienced professionals serving PE clients. Our practice is more than three times larger than that of the next-largest consulting firm serving private equity funds. Bain’s work with PE spans fund types, including buyout, infrastructure, real estate, debt and hedge funds. We also work with many of the most prominent limited partners (LPs) to PE firms, including sovereign wealth funds, pension funds, financial institutions, endowments and family investment offices. We support our clients across a broad range of objectives: Deal generation: We help PE funds develop the right investment thesis and enhance deal flow, profiling industries, screening companies and devising a plan to approach targets. Due diligence: We help funds make better deal decisions by performing diligence, assessing performance improvement opportunities and providing a post-acquisition agenda. Immediate post-acquisition: We support the pursuit of rapid returns by developing a strategic blueprint for the acquired company, leading workshops that align management with strategic priorities and directing focused initiatives. Ongoing value addition:...
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...According to historical statistics, it is shown that the reverse merger one time had been a boom in the market all over the world. But, here comes the question, what is a reverse merger? Generally speaking, a reverse merger, also known as a reverse takeover or reverse IPO, is a simpler and time-shorter method for private companies to go public than common IPO. In a reverse merger, investors of the private company plan to purchase and obtain the major shares of a public shell company, which is then merged with their own investing private company. In order to consummate the deal, the acquirer often trades its own shares with the public shell company in exchange for the shell’s stock, transforming a private company into a public company. Comparing to common IPO, reverse merger must have its own advantages and disadvantages that trigger some companies to use this method while some companies do not. Firstly, common IPO requires the company to raise capital from the public, but some private companies actually do not want to go public because they do not want someone from outside have the significant influence or control of their own companies, and reverse mergers give a private company the chance to become public without this kind of threat, which not only will considerably simplify the process and but also will obey company-owners’ intention. Secondly, common IPO usually takes several months or even over one year to materialize. What is worse is that this time-costly process...
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...robust the Alpaca’s business can be. According to Peggy, “with Alpacas it is something tangible that you have on hand and always going to be there” (University of Phoenix, 2014). Diversification Peggy lost almost half her retirement in the stock market and decided to turn to the Alpaca business for her new retirement plan (University of Phoenix, 2014). She had made a good return the first year of business. There is a risk involved with investing in only one asset. Stable Money Makers demonstrated this when it mentioned how investors lost significant money from investing in Emus in the 1990’s. Diversification is reducing risk by investing in two or more assets whose values do not always move in the same direction at the same time (Parrino, Kidwell, & Bates, 2012, p. 214). Investing in another asset in addition to the Alpacas would improve Peggy's business. If Peggy wants another tangible asset investing in cattle or production of hay are good options. They are not directly related to the Alpacas so if prices fall on...
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...Innovation and Social Entrepreneurship in Dev. Economies ------------------------------------------------- Case Brief Evaluation Form Note: You don’t have to answer the guiding questions verbatim, use them to prompt your thinking. You do need to suggest an action/recommendation. See me if you have any questions. For those who want more guidance, see below. 3 = Very Good/Above average 2 = Good 1 = Poor/Below Average Innovation at the Bottom of the Pyramid Impacts Comfort As a common practice in the poor countries, sharing mobile phones allows many of these customers to use their own SIM card and switch it in and out when borrowing a mobile device. However, this may be inconvenient as it is not secured and sometimes costly. Nigel Waller, founder of Movirtu, a British start-up, developed cloud software for people too poor to own their own mobile phone. The cloud phone offers a cheaper, more convenient alternative because it gives individuals who cannot buy a handset their own phone numbers and mobile services. This model presents mutual advantages for both the poor as well as the start-up. In other words, their service is priced for base-of-the-pyramid customers and the mobile network carriers get a piece of the action. This model is a demonstration that innovation can spur ventures that sell services aimed at the poor in a way that creates value at the base of the pyramid as...
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...arrange for the deficiency before time or to plan for investing the surplus money as profitable as possible without any threat to the liquidity. (2) Forecasting the Future needs. Cash budget forecasts the future needs of funds, its time and the amount well in advance. It, thus, helps planning for raising the funds through the most profitable sources at reasonable terms and costs. (3) Maintenance of Ample cash Balance. Cash is the basis of liquidity of the enterprise. Cash budget helps in maintaining the liquidity. It suggests adequate cash balance for expected requirements and a fair margin for the contingencies. (4) Controlling Cash Expenditure. Cash budget acts as a controlling device. The expenses of various departments in the firm can best be controlled so as not to exceed the budgeted limit. (5) Evaluation of Performance. Cash budget acts as a standard for evaluating the financial performance. (6) Testing the Influence of proposed Expansion Programme. Cash budget forecasts the inflows from a proposed expansion or investment programme and testify its impact on cash position.(7) Sound Dividend Policy. Cash budget plans for cash dividend to shareholders, consistent with the liquid position of the firm. It helps in following a sound consistent dividend policy. (8) Basis of Long-term Planning and Co-ordination. Cash budget helps in co-ordinating the various finance functions, such as sales, credit, investment, working capital etc. it is an important basis of long term financial...
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...of GDP. The reason for high productivity can be attributed to only intangibility. The financial statements of the service sector enterprises do not depict the intangibles – because of difficulty in identification, measurement and valuation. The growth of the Service Sector may be slowed down if the service firms which are mostly knowledge driven are not growing and the two major obstacles in the growth of knowledge driven firms are (a) Finance and (b) Coverage of risk. Since the methodologies have not been developed for valuation of the intellectual properties, there are no reported resources on the basis of which sources for raising the resources can be approached and also the assets can be insured. While addressing a gathering of students, an eminent speaker has said “Help the country by investing in yourself.” He emphasised that by investing in self one can create intangibles (intellectual property) which can bring tangible development of the nation. But question is how to measure the intangible? The measurement of intellectual...
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