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John B. Vinturella - Raising Entrepreneurial Capital, Second Edition

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Raising Entrepreneurial Capital guides the reader through the stages of successfully financing a business. The book proceeds from a basic level of business knowledge, assuming that the reader understands simple financial statements, has selected a specific business, and knows how to write a business plan. It provides a broad summary of the subjects that people typically research, such as How should your company position itself to attract private equity investment? and What steps can you take to improve your companys marketability?

Much has changed since the book was first published, and this second edition places effects of the global recession in the context of entrepreneurship, including the debt vs. equity decision, the options available to smaller businesses, and the considerations that lead to rapid growth, including venture capital, IPOs, angels, and incubators. Unlike other books of the genre, Raising Entrepreneurial Capital includes several chapters on worldwide variations in forms and availability of pre-seed capital, incubators, and the business plans they create, with case studies from Europe, Latin America, and the Pacific Rim.

  • Combines solid theory with a practitioners experience and insights
  • Case studies illustrate theory throughout the book
  • Updated to reflect the realities of the global economic recession

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Raising Entrepreneurial Capital Second Edition John B Vinturella PhD - photo 1
Raising Entrepreneurial Capital

Second Edition

John B. Vinturella, Ph.D.

Management Consultant, Principal, jbv.com, Cincinnati, OH, USA

Suzanne M. Erickson, Ph.D.

Associate Dean, College of Business and Mass Communication, Brenau University, Gainesville, GA, USA

Table of Contents Financial Statements Copyright Elsevier 32 Jamestown Road - photo 2

Table of Contents

Financial Statements

Copyright

Elsevier

32 Jamestown Road, London NW1 7BY

225 Wyman Street, Waltham, MA 02451, USA

Second edition

Copyright 2013, 2004 Elsevier Inc. All rights reserved

No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage and retrieval system, without permission in writing from the publisher. Details on how to seek permission, further information about the Publishers permissions policies and our arrangement with organizations such as the Copyright Clearance Center and the Copyright Licensing Agency, can be found at our website: www.elsevier.com/permissions

This book and the individual contributions contained in it are protected under copyright by the Publisher (other than as may be noted herein).

Notices

Knowledge and best practice in this field are constantly changing. As new research and experience broaden our understanding, changes in research methods, professional practices, or medical treatment may become necessary.

Practitioners and researchers must always rely on their own experience and knowledge in evaluating and using any information, methods, compounds, or experiments described herein. In using such information or methods they should be mindful of their own safety and the safety of others, including parties for whom they have a professional responsibility.

To the fullest extent of the law, neither the Publisher nor the authors, contributors, or editors,assume any liability for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods,products, instructions, or ideas contained in the material herein.

British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

A catalog record for this book is available from the Library of Congress

ISBN: 978-0-12-401666-8

For information on all Elsevier publications visit our website at store.elsevier.com

This book has been manufactured using Print On Demand technology. Each copy is produced to order and is limited to black ink. The online version of this book will show color figures where appropriate.

Dedication To Susan John B Vinturella To Warren Shannon and Ryan - photo 3

Dedication

To Susan
John B. Vinturella

To Warren, Shannon, and Ryan
Suzanne M. Erickson

Preface

This book is about financing the entrepreneurial venture. Why devote a whole book just to financing? The answer is that financial choices, especially those made early on, can affect future growth opportunities and strategic options. To avoid precluding desirable strategic actions later on, the entrepreneur needs to carefully structure the business from the beginning. Many potential entrepreneurs have great ideas for businesses, but without sound financial roadmaps on which to execute, they remain only ideas.

The second edition of this book is updated to reflect current data and trends and to include the impact of social media on financing. We take a somewhat broader look at financing than most texts do. In this book, we consider financing issues at all stages of the ventures life, from the birth of the company through growth, culminating in the exit from or sale of the business. We consider internal financial management and risk management as strategies to garner or conserve resources internally. We also look at franchising as an entry to entrepreneurship that involves somewhat less risk than the traditional start-up method.

This book is intended to be a guide that will increase the odds of success for the potential entrepreneur. To that end, the book is detailed and more experiential than theoretical. It is based on standard financial theory, but it also benefits from the experiences of many entrepreneurs and lessons learned the hard way. It is our hope that the book will provide useful, practical advice to all aspiring entrepreneurs in the all-important task of funding their new businesses.

Additional Resources including instruction manuals, teaching suggestions, and case study solutions, can be found on the companion website: http://booksite.elsevier.com/9780124016668/.

Acknowledgments

Suzanne M. Erickson

Many thanks to Kent Johnson of Alexander Hutton Capital and Doug Brown for sharing their wisdom and experience. Thanks to Harriet Stephenson for encouraging me down the entrepreneurial path. Especially, thanks to my wonderful family: Warren, Shannon, and Ryan.

John B. Vinturella

My wife, Susan Howell, improved the product by proofreading and by suggesting more objective and less inside-the-industry views and explanations. Her continuing encouragement was invaluable.

Introduction

John Vinturella and Suzanne Erickson

Getting Started

This book is about financing the entrepreneurial venture. Why devote a whole book just to financing? Financial choices, especially ones made early on, can affect future growth opportunities and strategic options. To avoid precluding desirable strategic actions later on, the entrepreneur needs to carefully structure the business from day 1. Many potential entrepreneurs have a great idea for a business, but without a sound financial road map to execute it, the idea will remain simply an idea.

In this book, we consider financing issues at all stages of the ventures life, from the birth of the company through its growth the sale of the business or its shutdown. We consider internal financial management and risk management as strategies to garner or conserve resources internally. We look at franchising as an entree to entrepreneurship that involves somewhat less risk than the traditional method of start-up.

This book is intended to be a guide that will increase the odds of success for the potential entrepreneur. To that end, the book is detailed and more experiential than theoretical. It is based on standard financial theories, but it also benefits from the experiences of many entrepreneurs and from lessons learned the hard way. Our hope is that the book will provide useful, practical advice to aspiring entrepreneurs in the all-important task of funding their new businesses.

It is important at the outset to distinguish between entrepreneurial ventures and other types of small business. Broadly speaking, new and/or privately held businesses can be divided into entrepreneurial ventures and the so-called lifestyle businesses.

Entrepreneurial ventures can be defined as new business start-ups with high growth aspirations. Typically, the entrepreneur is passionate about an idea or product, is willing to bear substantial risk to see his or her vision brought to market, and is willing to work incredibly long hours to realize the vision.

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