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Finance :!: - Coggle Diagram
Finance
:!:
How to raise money
friends and family
local bank
venture capitalists
business angels
business is not self-financing ---> Initial Public Offering
Investors' point of view
trade-off between risk and return
they make large capital gains that can be realised when they sell the shares
they may anticipate selling quickly and making a quick profit
Others prefer to avoid unpredictable consequences ---> blue chips
pull all your life savings
Public-private partnerships
Case of Sanchita Saha
Pitching to investors
looking into "angel" networking clubs
settling on London Business Angels
hedging bets
securing a place on gateway2investment
European Border Investment Programme
bring the disparate team together to
form a syndicate with a lead investor
Bank finance
raising equity finance through venture capital funds
Disadvantages of the different ways of raising finance
For
debt
, the disadvantages are that obviously the interest burden on debt is required to be paid over time
For
shares
equity carries a
significant capital cost
Public market
- dispersed shareholders base.
Private market
- lack of capital for business
Finance is always a short-term business
breadth of investing opportunity available is spoilt
speed and quality of info
banks has become less relationship-driven from a financing perspective and more relationship-driven from a sales and distribution perspective ---> loans become a more tradable feature and less static, creating a short-term relationship between the lender and the borrower.
it has become more easy to sell and buy shares, churn of shares is great and people have very short-termist nature.
Warren Buffet's fund - example of long-term perspective
Finance as a part of economics
allows to use credit instead of cash to purchase
goods and invest in projects
Financial institutions
stock exchanges
banks (commercial, savings)
finance companies
investment companies
investment banks
insurance companies
pension funds
security brokers and dealers
mortgage companies
real-estate investment trusts
concerned with providing funds to individuals, businesses and governments
Business recovery
common cause of failure is rapid growth ---> costs to rise steeply ahead of income
the causes of failure are complex
corporate restructuring
declarations of insolvency or bankruptcy
not every insolvent company is written off
In other cases the only choice is liquidation, with
assets sold at auction and staff made redundant
Banking
Sustainable banking
supporting projects that are delivering a
social, environmental positive impact
this business model is built on working with the real economy
triple bottom line
Changes in banking system
focus on banking in the real economy
banks can manage the risk of complete failure of the banking system
separation of activities
separating the more investment-banking type activity
from the more straightforward, commercial banking
Business of providing financial services
checking accounts, deposit and savings accounts
loans, credit cards and basic cash management services
commercial banks, savings and loan associations (SLAs) and
savings banks
assets and liabilities
Financial control
balance sheet
income statement
assets/liabilities +shareholders' equity
statement of cash flow