CHAPTER 9: FINANCING TECHNOLOGY VENTURE, AINI SOFIA BINTI MOHD ZOPRI…
CHAPTER 9: FINANCING TECHNOLOGY VENTURE
Categories of financial resources
Supplemented by funds from relatives and friends
External resources of finance
Reasons for the need to finance their business venture
The initial investment into the business might include one-time start-up costs and initial working capital.
One-time start-up costs are incurred for research & development, business incorporation, rental & utility deposits, fixtures & equipment and renovation.
The amount by which a financial obligation exceeds the amount of cash available.
-Usually corrected through short-term loans or equity injections.
To replace fixed assets.
Eventually, any fixed assets will break down or become obsolete.
Growth and Expansion
For business growth and expansion.
During the expansion period, additional costs that relates to advertising, payroll, warehousing, or research and development will be incurred.
4 External Sources
3 Stages of Financing
Pre-R&D and R&D
A relatively small amount of capital that is provided to technology entrepreneur to prove a specific concept for a potentially profitable business opportunity that still has to be developed and proven.
Normally provided to newly formed companies to be used in completing product development and in initial marketing.
Provided to companies that have expanded their initial capital and now require funds to initiate commercial-scale manufacturing and sales.
5 Factors that Venture Capitalists
There is a big market for what the entrepreneur is selling.
The product is different from what is out there
A solid management team is in place.
The company is a good fit for their investment philosophy
The entrepreneur is able to explain how he is going to use his money
4 Most common questions the entrepreneur must be prepared
:check: Is it can be pay the installment for every month even though there is no sale at all?
:check: How many interest if I apply loan for business?
:check: Is there any back-up finance if there is no business run for example COVID-19 pandemic occurred?
:check: How to the payback period?
Can be short term or long term in nature.
Accounts payable is an unsecured loan, owed to creditors for goods or services bought.
Payback the loan between thirty to ninety days.
Obtained in return for a proportional share of a firm's value.
Can be provided by the owner or by the directors of the firm, known as internal equity.
2 Advantages Debt Financing
Debt financing providers do not have ownership in the business.
Entrepreneur can choose either to use short-term loan or long-term loan.
2 Disadvantages Debt Financing
Loan must be paid within certain time. In the loan agreement, the borrower typically agrees to pay back the loan at a specific date, for instance every 3rd day in the month.
Consistent amount of loan repayment. Regardless of condition of the business, either profitable or not, the entrepreneur is responsible to ensure that the monthly loan payment is being paid.
5 Main Government Agencies
Ministry of Science, Technology and Innovation (MOSTI)
Smart Challenge Fund (SMART Fund)
International Collaboration Fund (ICF)
Malaysian Digital Economy Corporation (MDEC)
Digital Content Fund (MAC3 Fund)
Malaysian Green Technology Corporation (Green Tech)
Green Technology Financing Scheme (GTFS)
Malaysia Debt Ventures Berhad
Cradle Fund Sdn Bhd (Cradle)
Cradle Investment Programme 300 (CIP300)
Direct Equity 800 (DEQ800)
AINI SOFIA BINTI MOHD ZOPRI (2017302875) EH2207C