9/30/2016

Topic:EntrepreneurialFinance|CosmoLearningEntrepreneurship
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Topics: Entrepreneurial Finance

Entrepreneurial Finance
For more videos on FINANCE, go to the topic Finance under the subject Economics.

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Finance is the science of funds management. The general areas of nance are business
nance, personal nance, and public nance. Finance includes saving money and often
includes lending money. The eld of nance deals with the concepts of time, money and
risk and how they are interrelated. It also deals with how money is spent and budgeted.

Finance works most basically through individuals and business organizations depositing
money in a bank. The bank then lends the money out to other individuals or corporations
for consumption or investment, and charges interest on the loans.

Loans have become increasingly packaged for resale, meaning that an investor buys the
loan (debt) from a bank or directly from a corporation. Bonds are debt sold directly to
investors from corporations, while that investor can then hold the debt and collect the
interest or sell the debt on a secondary market. Banks are the main facilitators of funding
through the provision of credit, although private equity, mutual funds, hedge funds, and
other organizations have become important as they invest in various forms of debt.
Financial assets, known as investments, are nancially managed with careful attention to
nancial risk management to control nancial risk. Financial instruments allow many
forms of securitized assets to be traded on securities exchanges such as stock exchanges,
including debt such as bonds as well as equity in publicly-traded corporations.

Central banks act as lenders of last resort and control the money supply, which aects the
interest rates charged. As money supply increases, interest rates decrease.
Financial bootstrapping

Financial bootstrapping is a term used to cover dierent methods for avoiding using the
nancial resources of external investors. Bootstrapping can be dened as a collection of
methods used to minimize the amount of outside debt and equity nancing needed from
banks and investors[9]. The use of private credit card debt is the most known form of
bootstrapping, but a wide variety of methods are available for entrepreneurs. While
bootstrapping involves a risk for the founders, the absence of any other stakeholder gives
the founders more freedom to develop the company. Many successful companies
including Dell Computers were founded this way.

There are dierent types of bootstrapping:

* Owner nancing
* Minimization of the accounts receivable
* Joint utilization
* Delaying payment
* Minimizing inventory
* Subsidy nance

Source: Wikipedia

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9/30/2016

Topic:EntrepreneurialFinance|CosmoLearningEntrepreneurship

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