Unit 9

Starting up

A) What are the advantages and disadvantages for a private

individual of borrowing money from these sources?
Bank: ability of borrowing on long term, you have to pay interest.
Friend: not able to borrow big amounts of money, chance of getting into a fight
over money
A loan shark: It will cost you a lot more money than if you borrow from a bank.
extremely high interest rates
Member of family: same as a friend
Pawnbroker: this type of loan is that it is easy. You are simply going to have to
take something in that you can use for collateral and fill out some paperwork.
One of the disadvantages of getting a pawn shop loan is that the loan term is
typically very short.
Credit card company: Overuse--Revolving credit makes it easy to spend beyond
your means. Low-cost loans--You can use revolving credit to save today (e.g., at
a one-day sale), when available cash is a week away.
B) In what situations might someone use the sources of finance
mentioned inn exercise A?
Bank if you want to buy a house.
Family member if you want to invest in a project or set up a company
C) What do you think these saying means? Do you agree?
1.
Money talks: money can influence what is done or how it is done
2.
Dont put all your eggs in one basket: Don't invest all your money in one
company.
3.
You have to speculate to accumulate: take chances to win big
4.
Dont throw good money after bad: to waste money by spending more
money on something you have already spent money on that is no good.
5.
Lend your money and lose a friend: You should not lend money to your
friends; if you do, either you will have to bother your friend to repay the
loan, which will make your friend resent you
6.
Out a debt, out of danger: When we no longer owe money to anyone, we
are safe and secure. The implication is that it is dangerous to owe anyone.
7.
He who pays the piper calls the tune: said to emphasize that the person
who is paying someone to do something can decide how it should be done
8.
Beggars cant be choosers: said when you recognize that you must accept
an offer or a situation because it is the only one available to you.
D) What would you like to raise money for, and how would you do it?
At the moment, I dont have anything in particular I would want to raise money
for but if for example I met a girl who is sick and she needs a treatment of
surgery that is really expensive, I wouldnt mind helping out with raising money

for that. Maybe I could set up a fundraising or event that people can come to and
donate money.

Vocabulary

A)
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
ix)
x)

Choose the correct word to complete each sentence.

Cash flow
Asset
Fee
Bankruptcy
Indemnity
Stock
Principal
Mortgage
Budget
Venture

B) Choose the correct words to complete each definition

i)
ii)
iii)
iv)
v)
vi)
vii)
viii)

Black
Grant
Debtor
Dividend
Assets
Return
Debt
Collateral

C) Discuss these statements.

1) Leasing also offers you the chance to try out a particular machine for a few
years without buying it

Listening
A) CD3.1 Simon Davies is managing director at the Backstone Group,
a leading private equity firm. Listen to the first part of the
interview and answer these questions.
1. Which three ways of raising finance does he mention?
a. Equity
b. Borrowing through debt
c. Hybrid finance
2. What are the advantages of:
a. Private markets? Private confidentiality, remaining below the radar
screens

b. Public markets? Much deeper pocket, greater source of funding

available
c. Borrowing money? Same as public markets, greater source of
funding available.
B) CD3.2 Listen to the second part and answer this question?
1. What are the disadvantages of?
a. Shares/equity? Big capital cost, shareholder carry the full business
risk and dont have the right to repay their money
b. Debt? Interest burden on debt required to be paid over time
c. Public markets? Broader amount of capital available, dont create
that type of private you get with private markets. you dont know the
identity of shareholders.
d. Private markets? Lack of capital available if youre a significant
business. Youll lose a certain amount of control over who your
executive manager is.
C) CD3.3 Listen to the final part. Simon says there are four reasons why
finance has become a short-term business. What are they?
1. the breath of opportunity available. Gives people such a range of
investment choice, almost spoiled in the ability to invest, sell and reinvest.
2. speed and quality of information, information is key in making
investment decisions.
3. banks have become less relationship driven from a financing perspective
and more relationship driven from a sales and distribution perspective.
4. from an equity perspective, it has become so easy to sell and buy
shares.

Reading
A) How can start-up companies raise money?
Tap into savings, sign up strategic partners, loan by the bank, subsidy,
B) Work in small groups. Before you read the article, check that you
know the meanings of these terms. Use a dictionary if necessary.
1)
Business angels: private entrepreneurs who want to invest in
starting, promising or fast growing companies. Besides their financial help,
they also offer their expertise.
2)
Bank finance: gives us information about the definition of banking
and the definition of finance. Banking refers to that process in which a
bank which is a commercial or government institution offers financial
services that include lending money, collection of deposits, issue of
currencies and debit cards, and transaction processing etc.
The majority of banks works as profit-seeking enterprises, however, a few
government banks work as non-profit organizations. Central banks function
as government agencies and they regulate the interest rates and
circulation of money in the total economy.

3)
Equity finance: Equity financing is the process of raising capital
through the sale of shares in an enterprise. Equity financing essentially
refers to the sale of an ownership interest to raise funds for business
purposes.
4)
Debt fundraising: banks who are specialized in developing creative
solutions to challenging financing problems.
5)
Venture capital funds: funds are investment funds that manage the
money of investors who seek private equity stakes in start-up and small- to
medium-sized enterprises with strong growth potential.
C)
Work in pairs. Take notes on the key points of the article. Tell your
partner about them and ask each other questions if you want
clarifications.
No more easy money
Saha founder of CitySocialising
Went to France to pitch to hundreds of potential investors without
success

Angel working clubs: expensive business plan

London Business Angels

Gateway2investment
Nice: European Border Investment program

Together with LBA 300 000

Access to finance is difficult: bank finance is very high

Banks seem happier to lend start-ups

Pessimism about debt fundraising: not seeing anything back
Raising equity finance through venture capital takes about twice as
long
D)

Read the whole article and answer these questions in pairs.

1)

What was the problem with some of the angel networking clubs?
The angel networking clubs were charging 1 500 just to submit a
business plan.
2)
What was the advantage of London Business Angels?
She secured a place on gateway2investment.
3)
How did Saha improve her ability to pitch to backers?
By gateway2investment, a four-day program to help ambitious
entrepreneurs hone their pitching techniques.
4)
Who finally invested in Sahas company?
Finnish investors together with 5 wealthy individuals from LBA.
5)
What is the problem with bank finance?
A lot of companies has seen the cost of their existing finance
increase by up to 5 percentage points above the Bank of Englands
base rate.
6)
What is the position with debt funding and equity finance?
What you hear is still the same: that people are lending, but we are
not seeing any of that coming through.
7)
What is the problem with venture capital funds?
It takes twice as long as before the recession struck.

E)

Find idioms in the first six paragraphs that mean the following.
1)
Finish something you have started: to go the distance
2)
A sudden or unexpected chance to do something that allows you to
become successful in your job:
3)
Reduce your chances of failure or loss by trying several possibilities
instead of one: hedge her bets
4)
Make sure you always know what is happening in a situation:
keeping your ears to the ground

F)

Complete these sentences with the idioms in Exercise E.

1) Do you think Isabella will go the distance this time?
2) There are hundreds of young musicians out there looking for a
3) Its a good idea to hedge your bets by applying to more than one MBA
program.
4) Keep your ears to the ground for information about the next fundraising
event.

G)

discuss these questions.

1. what questions would you ask saha if you were an investor?
Why do you want to start your company?
How do you see the future of your company?
What part do we, investors have in your company?
2. if you were setting up a business in your country, how would you raise
the finance?
By bank
By savings
By investors

Language Review
A) Complete the extract from the article with suitable words and
dependent prepositions from the box.
i) Looked into
ii) Access to
iii) Investing in
iv) Turned down
v) Settled on
vi) Pitch to
B) Study the grammar reference on page 150, then match these
halves of sentences.
i) 10-i
ii) 7-e
iii) 2-a
iv) 3-f
v) 4-b
vi) 5-h
vii) 9-j
viii) ,6-g
ix) 8-d
x) 1-c

LANGUAGE REVIEW
A) Complete the extract from the article with suitable words and
dependent prepositions from the box. Then look back to page 85
to check your answers.
First, she 1) looked into angel networking clubs, which provide
entrepreneurs with 2) access to large numbers of wealthy individuals
interested in 3) investing in early-stage ventures. However, she 4) turned
down a number of these for reasons of cost: they were charging 1 500
just to submit a business plan. Eventually, she 5) settled on London
Business Angels, through which she could 6) pitch to roughly 100 angels.
B) Study the Grammar reference on page 150, then match these
halves of sentences. They are all from newspaper articles or
headlines.
1) EFM, the struggling investment house, yesterday became vulnerable
2) The government refuses to take responsibility A
3) Deputy Prime Minister invites Japan to invest
4) Does Lulu.com pose a serious threat
5) She is going to complain
6) The banks insisted
7) Our programme offers access
8) The new Director of Finance must be capable
9) Teenagers need to develop a healthy respect
10)
All financial supervisors should be fully aware

SKILLS
A) Which of these negotiating tips do you agree with? Why/ Why
not?
I agree with: 1, 5, 6 and 7
B) Research shows that skilled negotiations often use the
techniques listed below to achieve their negotiations objective.
Match the techniques to their definitions (a-e)
1-E
2-D
3-B
4-A
5-C
C) CD3.4 listen to five expressions and match each one to the
correct technique in exercise b.
No Part 4&5 on the CD-rom
D) CD3.5 listen to the dialogue and complete these expressions.
No Part 4&5 on the CD-rom