A Study on Entrepreneurial Finance

This document is authorized for use only by Rachel van Munster in Entrepreneurial Law and Finance taught by Rafael P. Ribas, at HE OTHER from February 2015 to March 2015.

In Initial Human and Financial Capital as Predictors of New Venture Performance, Cooper et al (1994), reviewed a sample of 2994 entrepreneurs across various sectors, high-tech and non-high-tech, to determine whether an entrepreneur’s upbringing, experiences and education had a statistically significant relationship with the probability of success.

Note on the financial perspective: What should entrepreneurs know? William A. Sahlman, Harvard Business Publishing (9-293-045)

12. According to the chapter, which of the following is not an acceptable means of maintaining an entrepreneurs’ personal cash flow?

Entrepreneurship is difficult to define throughout its history research. Even nowadays, this concept is still a debatable point (Rajendra, et al., 2017). Based on four decades of research, Gartner (1988) concludes that entrepreneurs are founders of new firms. Shane and Venkataraman (2000) consider entrepreneurship as “a new venture’s risk-taking endeavor seeking an opportunity” and Fortunato (2014) adds innovative value into the concept of entrepreneurship. Thus, research on the definition of entrepreneurship continue. According to those diverse views, I will interpret six unique entrepreneurial characteristics and theoretically analyze each one. Risk taker, need for achievement and proactivity as my strengthens will be illustrated with my experience. Innovativeness, internal locus of control and tolerance for ambiguity are my weaknesses, thus I will describe relevant successful Entrepreneurs’ experiences.

In the sphere of small business financing, two categories of individuals are pertinent in the overall scheme of financing, they are those that invest their monies, as well as, the individuals that lend monies (Hodgetts, 2007). These two modes of funding produce the same results, which is the provision of the necessary capital needed to begin the business adventure of the individual. However, funding can at times be difficult to procure as reiterated by Nicole Taylor (2015), in her article “14 Creative Financing Methods for Startups. She offered numerous ways to procure these funds, such traditional loans, renting one home to others, credit cards, equity, online lending institutions, family and friends, as well as others. However, the dilemma remains, which way offers the best choice for the individual.

Every successful entrepreneur must be have this traits which is failure is an option . Failure is an option can be define as when you do something wrong, you learn from it, and try to avoid damage and do your best. Normally people is try to escape for making a mistake or avoid to fail while doing something. We should always prepare a plan B for doing anything else, it is because instead of we are doing wrong at least we having a plan B. Learn from the mistake and take it as a reference avoid to step the mistake again.

Every successful entrepreneur must be have this traits which is failure is an option . Failure is an option can be define as when you do something wrong, you learn from it, and try to avoid damage and do your best. Normally people is try to escape for making a mistake or avoid to fail while doing something. We should always prepare a plan B for doing anything else, it is because instead of we are doing wrong at least we having a plan B. Learn from the mistake and take it as a reference avoid to step the mistake again.

This case study makes us clear some of the very important characteristics of Entrepreneurs. Hugh, despite of losing his family business after his father’s death didn’t lose hope and stuck to his work hard and long. This actually refers to one of the vital trait of an entrepreneur i.e. the need for achievement which is accompanied by another trait, ‘Determination’ which actually made Hugh keep the struggle going to gain the lost glory.

There has been extensive research conducted on the characteristics that successful entrepreneurs possess. These attributes vary widely across literature, however there are common key traits that are required to achieve any form of success. Frederick et al (2013) suggest entrepreneurs are risk takers, optimistic, have sound judgement and an ability to manage. While a review of literature relating to the psychology of an entrepreneur reveals a large variety of characteristics in a successful entrepreneur, these can be consolidated to a a few into only a few traits that are essential for a successful entrepreneur. Whilst taking into

This paper investigates the financing process of tech startup firms, their potential financing sources, how they make financial decisions and how they build the capital structure, with special emphasis in Chinese entrepreneurs’ perspective. The applicative of pecking order theory in tech startups financing. China has a fast growing economy, which tech startups contributes a lot. This research can provide a better understanding of entrepreneurs’ financing strategy.

You must be an optimist because, at some point, you have to see beyond the hard times to see the better times. Optimism and confidence tend to go together. You, as the business owner, must be able to make it through the tough times because you have hope on getting better.

For the purpose of this paper, internal financing refers to funds derived within the business, usually from profit from ongoing operations (Santini & Sopta, 2008). Entrepreneurs tend to prefer this option which targets capital from owners, family and friends, business associates and other personal contacts. Internal financing is known to be associated with relatively low issuing and information costs (Bruns, 2004). The reality however, is that it is often-time insufficient to adequately meet operating needs. It follows therefore that the growth of SMEs is constrained by the ready availability of internal finance and as such they need to explore other avenues to finance their business.

Entrepreneurial cognition refers to the knowledge structures that people use to make assessments, judgments, or decisions involving opportunity evaluation, venture creation, and growth (Mitchell, Busenitz, Lant, McDaugall, Morse, & Smith, 2002). It is the approach that is characterized by the study of the type of cognitions among others that could help to define the entrepreneur, explain entrepreneurial behaviours in relation to identification of business opportunities and growth, success in business, and distinguish entrepreneurs from other

Access to capital and credit at various stages in the business life cycle is identified as the major hurdle by the entrepreneurs. For many small firms and most start-ups, the personal funds of the business owners and entrepreneur and those of relatives and acquaintances establish as the major source of capital. For many small businesses, especially during the early years of their operation, credit is simply not available. For many others, the limited available credit is not through bank loans. Due to this many of them rely on multiple credit card balances and home equity loans as major sources of credit for start-up firm. Because banks are bound by laws and regulations to prudent lending standards that require them a risk management assessment for each loan made. These regulations were made more vigor during the late 1980 ' ' and early 1990’s. Banks always found