Documente Academic
Documente Profesional
Documente Cultură
(ENT600)
UNIT 9 :
FINANCING
TECHNOLOGY VENTURE
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Introduction
A technology venture can only grow as fast as its
capital allows.
Generally, capital can be obtained from at least
three categories of resources, either solely, or a
combination of the three:
Entrepreneurs own resources
Resources from external investors
Government financing schemes (loans, grants
& government venture capital funds)
Eventually, internally generated revenue will
provide the operating capital for the venture.
Entrepreneurship Dept, FBM (2009)
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Availability of Finance
The availability of finance is a key factor in the
development of a new technology-based venture.
However, entrepreneurs with technology-based
ventures can face major challenges for financing
the start-up and operating capital needs of these
ventures.
Since investments in technology-based ventures
carry significant risks, the investors expectation
of returns on their investments can be high.
Entrepreneurship Dept, FBM (2009)
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Methods of Financing
The choice of financing method is an important
determinant of whether an idea or product can
reach the market quickly and successfully.
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Stages of Financing
Generally, funds for technology ventures are raised
in stages. Staging of financing allows investors to
deal with the uncertainty of the validity of the idea
and the untested nature of the management in the
company.
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Stages of Financing
PRE-R&D
AND R & D
PRE-COMMERCIALIZATION
Pre-seed
financing
Seed
financing
COMMERCIALIZATION
First round
financing
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GROWTH &
EXPANSION
Stages of Financing
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Stages of Financing
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Stages of Financing
Commercialization Stage
First-Round Financing
Financing is provided to companies that have
expanded their initial capital and now require
funds to initiate commercial-scale manufacturing
and sales.
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Stages of Financing
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Stages of Financing
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PRE-COMMERCIALIZATION
Seed financing
COMMERCIALIZATION
First round financing
GROWTH &
EXPANSION
Second round & Third
round financing
Angels Financing
Government Financing Schemes (loan, grants & govt. venture capital funds)
Venture Capitals
Banks & DFIs
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Sources of Financing
Self, Relatives and Friends
The
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Sources of Financing
Angel Financing
For
The
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Sources of Financing
Governments Financial Assistance
Governments
financial
assistance
to
technology-based companies can be classified
into two groups: government funding schemes
and grants.
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Sources of Financing
Venture Capital (VC) Financing
VC
In
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Sources of Financing
Banking and Development Financial
Institutions (DFIs)
Banking institutions and DFIs have been
providing financial facilities to small and medium
enterprises (SMEs). However, commercial banks
and DFIs typically do not invest in start-up
technology-based companies because of the
high level of risk of the business and the
absence of a track record in terms of assets,
profits, and positive cash flow.
Entrepreneurship Dept, FBM (2009)
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The fund focus particularly on start-up and early-stage highgrowth companies, bringing them to fruition through its
service-oriented approach of partnership investment.
Size of direct investment :
start-ups - between RM50,000 to RM500,000.
other than start-up - ranging from RM500,000 - RM10
million
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MAVCAP:
To
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MDeC:
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MDeC:
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MTDC:
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InnoFund
Technofund
Content Fund
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InnoFund - EIF
Enterprise Innovation Fund (EIF) assists individuals/soleproprietor, micro and small business to develop new or
improve existing products, process or services with
elements of innovation for commercialization.
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MOSTI:
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MOSTI:
Technofund
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MOSTI:
Technofund (cont)
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Content Fund
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SME Corp:
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AGENCY
FINANCING SCHEME
MAVCAP
MDeC
MTDC
MOSTI
Matching Grants
1. For Business Start-ups
2. For Product & Process
Improvement
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EQUITY FINANCE
Debt financing
involves a payback of
funds plus an interest.
Equity financing
involves the sales of
some of the ownership
in the venture.
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