Funding a Business Venture

Topics: Finance, Corporate finance, Risk Pages: 3 (880 words) Published: February 5, 2012
Funding a Business Venture
Continuing with the scenario from Unit 1, you now need to make a management decision about how to fund your business. You have several options. You can borrow money, sell stock, or license the technology. Chose the type of funding which you prefer. Then, write a 2–3 page paper that reflects your decision-making analysis. In this paper, be sure to include the following:

Using your own words (no quotations), write a series of short paragraphs describing the meaning, function, and importance of each of the following four terms: Investment Banker
Stock Market
Financial Management
Risk Financing
Identify your preferred source of funds.
Describe your decision for choosing this form of funding. Explain the pros and cons of your decision.
Describe one other possible option for this funding decision.

In this scenario, we have an inventor with no management or financial skills but who finds himself with great idea for a new home appliance. Though his idea is not a complete break through, it is set apart by being inherently safer than those currently on the market. He is confident that this new technology will be applicable and to a wide range of other products, but is not sure he has the resources to start up this business venture on his own.

He now has to decide if it is better to borrow money, sell stock, or license the technology.  There are many advantages to each but he must take the disadvantages and costs of each into consideration with where he sees his technology going in future.

Borrowing from his family, relatives, friends, and business partners for his business venture as they will provide much needed support to the inventor and enjoy the excitement and success of the new venture. Loans from family, friends, and partners can be obtained quickly since they share a relationship that is based on a more personal level with our inventor. He will have the benefit of...
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