How to Raise Capital Techniques and Strategies for Financing and Valuing your Small Business

by Timmons, Jeffry; Spinelli, Stephen; Zacharakis, Andrew

• ISBN13: 9780071412889
• ISBN10: 0071412883
• Edition: 1st
• Format: Paperback
• Copyright: 2004-09-29
• Publisher: McGraw-Hill Education

Summary

The entrepreneur's step-bystep guide to venture capital--where to find it, how to secure it, and what to do with it Fewer than 40 percent of entrepreneurs seeking new business funding each year actually get that funding. How to Raise Capital improves those odds, providing prospective as well as current business owners with the knowledge they need to prepare an effective loan proposal, locate a suitable investor, negotiate and close the deal, and more. The all-star team of entrepreneurial experts behind How to Raise Capital gives readers top-level educational theory with hands-on, real-world knowledge. This thorough examination of the inner workings of the venture capital industry explores: Resources available to entrepreneurs, from SBA loans to angel investors Proven strategies for identifying and approaching equity sources Characteristics of a "superdeal"--from the investor's perspective

Author Biography

Jeffry A. Timmons (Greenfield, NH) is the director of the Price-Babson College Fellows Program at Babson College.

Stephen Spinelli (Longmeadow, MA) is the founder of Jiffy Lube International and director of Babson's Arthur M. Blank Center for Entrepreneurship.

Andrew Zacharakis (Bedford, MA) is the Paul T. Babson Term Chair in Entrepreneurship at Babson.

Table of Contents

Introduction	vii
CHAPTER 1 THE OPPORTUNITY: HAVE YOU CRAFTED A BUSINESS THAT WILL CREATE WEALTH?	1	(26)
Think Big Enough	1	(1)
Opportunity Through a Zoom Lens	2	(12)
The Role of Ideas	14	(3)
Pattern Recognition	17	(7)
Conclusion	24	(3)
CHAPTER 2 ASSESSING YOUR COMPANY'S POTENTIAL	27	(28)
How Attractive Might Your Company Become?	32	(1)
Assessing Your Deal	32	(20)
Conclusion	52	(3)
CHAPTER 3 TEAM BUILDING	55	(20)
The Entrepreneurial Approach to Resources	55	(3)
Using Other People's Resources (OPR)	58	(2)
Outside People Resources	60	(11)
Conclusion	71	(4)
CHAPTER 4 VENTURE AND GROWTH FINANCING: THE ENTREPRENEUR'S ACHILLES' HEEL	75	(20)
The Three Core Principles of Entrepreneurial Finance	75	(2)
Financial Management Myopia: It Can't Happen to Me	77	(2)
Critical Financing Issues	79	(3)
Entrepreneurial Finance: The Owner's Perspective	82	(3)
Determining Capital Requirements	85	(5)
Crafting Financial and Fund-Raising Strategies	90	(4)
Conclusion	94	(1)
CHAPTER 5 OBTAINING VENTURE AND GROWTH CAPITAL	95	(38)
The Capital Markets Food Chain	95	(2)
Cover Your Equity	97	(2)
Angels and Informal Investors	99	(4)
Venture Capital: Gold Mines and Tar Pits	103	(1)
What Is Venture Capital?	104	(1)
The Venture Capital Industry Pre-1990	105	(6)
Venture Capital Industry	111	(1)
The Venture Capital Process	112	(9)
Other Equity Sources	121	(8)
Keeping Current About Capital Markets	129	(1)
Conclusion	130	(3)
CHAPTER 6 THE DEAL: VALUATION, STRUCTURE, AND NEGOTIATION	133	(28)
The Art and Craft of Valuation	133	(1)
What Is a Company Worth?	134	(4)
Valuation Methods	138	(7)
The Reality	145	(5)
Negotiations	150	(3)
Sand Traps	153	(4)
Conclusion	157	(4)
CHAPTER 7 OBTAINING DEBT CAPITAL	161	(28)
A Cyclical Pattern: The Good Old Days Returned but Again Faded	161	(2)
Sources of Debt Capital	163	(13)
Before the Loan Decision	176	(6)
The Lending Decision	182	(1)
After the Loan Decision	182	(4)
What to Do When the Bank Says No	186	(1)
Beware of Leverage: The ROE Mirage	187	(1)
Conclusion	187	(2)
CHAPTER 8 MANAGING RAPID GROWTH	189	(24)
Inventing New Organizational Paradigms	189	(2)
Leading Practices of High-Growth Companies	191	(1)
Growing Up Big	192	(8)
The Importance of Culture and Organizational Climate	200	(4)
Entrepreneurial Management for the Twenty-First Century: Three Breakthroughs	204	(6)
Conclusion	210	(3)
CHAPTER 9 THE HARVEST AND BEYOND	213	(18)
A Journey, Not a Destination	213	(1)
The Journey Can Be Addictive	214	(1)
First Build a Great Company	214	(1)
Create Harvest Options	215	(2)
A Harvest Goal	217	(1)
Crafting a Harvest Strategy: Timing Is Vital	218	(2)
Harvest Options	220	(7)
Beyond the Harvest	227	(2)
Conclusion	229	(2)
Index	231