Frank J. Fabozzi - Entrepreneurial Finance and Accounting for High-Tech Companies

Frank J. Fabozzi

The MIT Press

Cambridge, Massachusetts

London, England

2016 Massachusetts Institute of Technology

All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher.

This book was set in Times New Roman and Syntax by Toppan Best-set Premedia Limited. Printed and bound in the United States of America.

Library of Congress Cataloging-in-Publication Data

Names: Fabozzi, Frank J., author.

Title: Entrepreneurial finance and accounting for high-tech companies / Frank J. Fabozzi.

Description: Cambridge, MA : MIT Press, 2016. | Includes bibliographical references and index.

Identifiers: LCCN 2016014528 | ISBN 9780262034982 (hardcover : alk. paper)

eISBN 9780262336895

Subjects: LCSH: Business enterprisesFinance. | Accounting.

Classification: LCC HG4026 .F3298 2016 | DDC 658.15dc23 LC record available at https://lccn.loc.gov/2016014528

ePub Version 1.0

Mung Chiang

Arthur LeGrand Doty Professor of Electrical Engineering

Director, Keller Center for Innovation in Engineering Education

Inaugural Chair, Princeton Entrepreneurship Council

Princeton University

At Princeton University, we define entrepreneurship as initiating transformations through risk-taking actions and value-creating organizations. To turn the mind-set of entrepreneurship into action, a wide range of capabilities must be acquired. Some of these capabilities can be taught in classrooms, while others need to come from hands-on experience in the field. Based on classroom teaching but drawing from many real-world examples, this excellent textbook provides a balanced and in-depth explanation of entrepreneurial finance: an area in which all entrepreneurs, in high tech or no tech, for-profit or nonprofit, must develop a thorough understanding.

The textbooks author, Frank Fabozzi, is an entrepreneur, educator, and highly regarded expert in the areas of financial theory and practice and the bond market. Frank was appointed the James Wei Visiting Professor in Entrepreneurship at the Keller Center for Innovation in Engineering Education at Princeton University for the 201314 academic year. The Spring 2014 course he taught, Special Topics in Entrepreneurship: Entrepreneurial Finance, attracted a large enrollment of eager students. The focus of this course was on the financing of startup ventures that seek to raise external capital. The course addressed such important topics as how to develop a financial plan, including how much money to raise and when to raise it; alternative funding sources available at different stages of a new venture; alternative funding vehicles; how to negotiate the terms of a financial deal; how to value a venture; and exit strategies. The course also covered other important components that, taken collectively, lead to a successful venture: the value proposition, marketing, cost structure, key partnerships, key resources, and firm governance.

To illustrate how well received Franks course was, here are some comments from students in his class: Fantastic. Really helpful for my future career path as well. Meeting w Professor Fabozzi outside of class for help on my entrepreneurial ventures was very helpful, and encouraged my engagement in entrepreneurship both inside and outside the classroom. A great speaker who knows the material well. Professor Fabozzi is an excellent professor and mentor and is always willing to go above and beyond to help his students with in class or out of class projects.

The book you now hold contains the material of this outstanding course and should be read by all aspiring entrepreneurs.

The field of entrepreneurship encompasses several areas of study. The first is the personality of entrepreneurs with respect to their background characteristics, their behavioral patterns (particularly their attitude toward risk), and their motivation for starting a new venture. A second area of study is the link between technological innovation and entrepreneurship and the resulting impact on a countrys economy in terms of economic growth, productivity, and employment. Entrepreneurial strategy is the third area of study, focusing on the unique challenges that entrepreneurs face owing to limited resources and a competitive disadvantage relative to established firms and markets. Strategies that cover marketing, production, and financing are the fourth area of study. Evaluating the relative advantages and disadvantages of corporate governance structures is the fifth area of study in the field of entrepreneurship. This area focuses on ownership control of the new venture and how alternative funding sources may have an impact on that control as the venture grows. The final area is finance, including alternative financing vehicles, sources, and strategies available to entrepreneurs at various stages of a ventures development, as well as related topics such as financial planning and accounting issues.