Please enable JavaScript.
Coggle requires JavaScript to display documents.
Chapter 15 - Raising Capital/ Financing Life-cycle - Coggle Diagram
Chapter 15 - Raising Capital/ Financing Life-cycle
Financing Life cycle
Early-stage financing
Venture capital
private financing for new, high-risk, ventures (new companies)
VC benefits if firm is successful due to capital raised in the process
Financiers
Angel investors
Wealthy people who invest
VC firms
many investors pool money then others in firm decide
private independents
Corporate VC funds
Labour-sponsored
Private equity
Government funds
government agencies
crowd funding
Stages of Finance
Start-up/mezzanine
money to begin manu,
Expansion
money to marketing, distribution
Seed
money for prototype and manu plan
Acquistion
Turnaround
reworking project
done to limit risk since most startups fail
more then one VC can finance different stage
Choosing a VC
Matching management style
Good references
Financial strength
Network of VC
Exit strategy
Reverse Take Over
Entrepreneurs buys back shares
Sell shares to third party acquiring the firm
Sell shares to company merging with the firm
Initial public offering
Later-stage financing
Public issues
Sale of securities in public markets
Underwriter
Services
Advice on issuing
Prices securities
Sells securities
Price stabalization
Compenstation
Spread
what syndicate pays for share - what share sells for in market
Selling concession
Management fee
Issue to market
Syndicate
Group of underwriters that market securities and share risk
Types
Firm commitment
Syndicate bears risk of not being able to sell issues
Best efforts
Firm bears risk of issue not being sold
Underwriters does not guarantee to sell entire issue
Dutch Auction
Investor bid for shares
Steps
Obtain perms from board of directors
Prepare and distribute preliminary
prospectus (red herring)
to OSC and investors
summary providing info on issue of securities
States risk
For OSC to review and approve
Price is determined and dealers begin selling issue
General Cash Offer
New securities for sale to public
IPO
First issue to public
Season Equity Offering (SEO)
new issue from firm that has previously issued
Public Issue Aspects
Overallotment option/ Green Shoe Provision
Syndicate can purchase 15% more of the issue
Happens for underpriced IPOs and in-demand companies
Lock up Agreement
Selling Period
Rights Offering
offers shareholders to right to buy shares at sub price