Management and Organizational Studies 1023A/B Lecture Notes - Lecture 1: Angel Investor, Montreal Exchange, Strike Price

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1023A/B
• Professor: Maria Ferraro

Document Summary

Developing a prototype type up your bootstraps. Bootstrapping phase (step 1) is where entrepreneur gets seed money (most of the time its personal investment) Google two computer science grads used their own money to start this business (bootstrapping) Early financing phase (step 2) angel investors; are individuals that provide this initial capital. It is difficult for entrepreneurs to get this capital because the business has no proven track record. Informational asymmetry problems (the entrepreneurs know more technical skills than managers) Vc investment is equity not debt (common stock or preferred stock) At this point the company is still private company. Vcs know the business; they"re picking and only invest in projects that they truly believe will succeed. How to mitigate risk: fund in stages, requiring entrepreneur to make personal investment (prove to me you have confidence) shows commitment. In-depth knowledge of industry (specify in your field of investment pick an industry and know it inside out)