Sunset Snips: External Source Of Finance

• Overdraft protection, up to the amount available for cash advances under your credit limit, when linked to your Regions checking account

• Owner has limited capital: $15,000 for feasibility study; and $500,000 of trust money that will be made available for investment.

1. Describe a real or made up but realistic situation that could cause you or someone you know to have to use money from a financial reserve. (3-6 sentences. 2.0 points) I babysit two kid for parents that work during the day so if one of the lost their job I would lose mine, If I saved up a financial reserve then I might have to use it to pay for my phone bill or for clothing I need.

Hart Venture Capital (HVC) specializes in providing venture capital for software development and Internet applications. Currently HVC has two investment opportunities: (1) Security Systems, a firm that needs additional capital to develop an Internet security software package, and (2) Market Analysis, a market research company that needs additional capital to develop a software package for conducting customer satisfaction surveys. In exchange for the Security Systems stock, the firm has asked HVC to provide $600,000 in year 1, $600,000 in year 2, and $350,000 in year 3. In exchange of their stock, Market Analysis has asked HVC to provide $500,000 in year 1, $350,000 in year 2,

Zacharakis and Meyer’s research (1998) into the investment decision-making processes of VC investors is particularly pertinent to whether VC investments can be systematically improved and whether there are any gaps between understanding of their procedures and what happens in reality. Zacharakis, via studying 53 VCs from the two main start-up hubs in the United States (Silicon Valley and Colorado Front Range), establishes that there is a gap between the factors that affect VCs’ decision-making in reality and the factors that VCs identify as pertinent to their decision-making.

Overdraft protection comes at a price. Although it does agree to its consumers to break out paying overdraft bill, it does charge notice on the amount glide to them. Many banks allow their clients to link their bank financial statement to a credit card in organizes to evade overdraft

Techniques for charging interest should they concur that one will have an intrigue free period on the overdraft. Otherwise they charge an expense and apply enthusiasm as laid out.

Most banks today offer overdraft protection with their checking accounts. If you overdraw your account, then the funds will automatically be transferred from the credit card or savings account to your checking account. Banks will usually charge a small fee for this transfer. However, this fee is usually less than the amount that you will have to pay in interest on a payday loan.

Venture Capital is a specific term that refers to funding obtained from a venture capitalist. These are professional serial investors and may be individuals or part of a firm. Often venture capitalists have a niche based on business type and or size and or stage of growth. They are likely to see a lot of proposals in front of them (sometimes hundreds a month), be interested in a few, and invest in even fewer. Around 1-3% of all deals put to a venture capitalist get funded. So, with the numbers that low, you need to be clearly impressive.

Cash Connection substitute threat is strong. Banks, credit unions, and credit card companies offer features that will help customers who are in need of money fast. Overdraft protection is offered by banks. To ensure that the customer does not exceed their account balance is considered a substitute. Like loans have fees so does the overdraft protection benefit. Credit unions over loans but they are not fast and convenient so consumer tend to lean on payday lenders for their quick money.

One of the major setbacks to getting capital for a new business venture is the

An account that is used to set funds aside that are for worst case scenarios, such as medical illness, job layoff, or other major expenses.

The other option Mr. Semcken can use is equity financing. Equity financing refers to money attained from investors in exchange for an ownership share in the business. Such funds may come from friends and family members of the business owner, wealthy angel investors, or venture capital firms (Rath, 2012).The main advantage of equity financing is that the business is not required to repay the money. Instead, the investors expect to recover their investment out of future profits. The participation of high-profile investors may also help raise the credibility of a new business. The main disadvantage to this type of financing is that the investors become partial owners of the business, and therefore have a say in business decisions. As ownership interests become blurry, managers face a probable loss of independence or control (Rath, 2012). As well, an undue dependence on equity financing may signify that a business is not using its capital in the most constructive way.

If the same principles are applied in regards to venture capital and taxes we see that the venture capital people would get $44,088 leaving $132,264 before taxes. Taxes would come to $66,132 leaving an increase in cash of $66,132.

Venture Capital is one of the fastest emerging sources of finance for new entrepreneurs. In spite of its increasing popularity, funding via Venture Capital is faced with a number of difficulties. Thus, it is important to study the various aspects of raising funds through Venture Capital.